Definition and functioning of the personal loan
The purchase of an apartment or a car, the concretization of a union are so many personal projects which require a consequent budget. If you do not have the necessary capital, you can always take out a loan from a financial institution. To this end, the personal loan is an alternative that can be very advantageous under certain conditions.
Personal loan: what should I know?
By personal loan, we mean a credit that is granted for consumption. You can therefore use it to buy goods or to meet a cash flow need. It is an alternative that allows the borrower to enjoy the amount received without providing proof to the bank. This solution also offers you the opportunity to finance your projects, even when you have no personal contribution. The personal loan is very popular with the French and at the same time benefits the banks. According to the jechange.fr website, more than 11 billion euros in loans of this type were granted in 2013 and the figure continues to rise every year.
By subscribing to it, you accept** certain obligations** that are specific to a loan in general. These are the :
- interest rate or overall effective rate ;
- the duration of the repayment ;
- the total amount to be repaid, etc.
It is imperative to remember that, according to the Lagarde law, the amount to be borrowed in the framework of a personal loan must not exceed 75 000 €. You do not need to draw up any estimate before taking out your loan. This is a flexibility that appeals to many individuals who can now flourish in their daily lives.
Case study : borrowing $10,000
What is the use of a personal loan and why choose it?
Taking out a personal loan allows you to increase your purchasing and spending power. Combined with your savings, this borrowed sum can allow you to improve your living environment. It will now facilitate the purchase of your appliances, the realization of renovation works and many other things. The goal is to lighten the daily life of all by allowing them to have a respectable standard of living.
For the borrower, it is an affordable solution, since the loan is repaid over a long period of time, usually from 6 to 84 months. In some cases, you even have the option of choosing the length of your repayment. The other advantage is that the conditions are fixed. To this end, the APR represents the interest rate and includes :
- application and registration costs
- commissions
- insurance costs and mandatory guarantees.
If generally the conditions of the loan are known at the time of the signature of the contract, it should be remembered that you have the possibility of exercising** your right of retraction**. This is a 14-day period during which you can break the contract and choose another organization. Finally, the money is paid directly to you by check or transfer. In addition, the management fees are reduced for the borrowing organization that you will have to choose.
How to choose a personal loan?
To choose a personal loan, you must take into account some essential criteria.
Use an online comparison tool
The choice of the lending institution or bank is crucial to make a decision. To this end, online comparators are platforms that put several providers side by side so that you can select the best one. They are testers who base themselves on the quality of the service. You will find reviews from former customers on which you can base your choices.
Use the simulators
All online banks provide a simulator on their website. To use it, you have to fill in your personal information and fill in the electronic form until the end. The amount to be repaid, the interest rate and the repayment period are displayed and it will be up to you to decide according to the other offers on the market.
Pay attention to the conditions
When signing the contract, check the conditions for early repayment. If the law allows institutions to apply a penalty, it must be negotiable. Check also the presence or not of an insurance and the amount of the contribution.
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