The personal loan is one of the most requested credits by the borrowers. It is prized for the many advantages it offers. Its operation is subject to a certain formalism. This one frames as well the request as the monthly payments and the repayment of this loan. To know a little more, discover how a personal loan works.
The essentials on the personal loan
The **personal loan **is a consumer credit made available to a borrower by a bank or credit institution. Its maximum amount is 75 000 € and its repayment period is between 4 and 84 months.
The personal loan has the particularity of being a non-affected credit. This means that it is not intended to finance a specific expense. You can therefore use it to finance the project of your choice. Thus, the personal loan can be used to finance a trip, a wedding or a high-tech equipment among others. Now you just need to know how to get it.
How to apply for a personal loan from a bank?
The application for a personal loan at a bank is done in several steps. These are essentially the simulation and the constitution of the file.
Simulate a personal loan
The first step in applying for a personal loan is the simulation. It allows you to have an idea of the amount you can borrow according to your profile. To make your personal loan simulation, you just have to use an online simulator. You will have to fill in some data so that all the information related to your loan is revealed to you.
Thanks to the simulation, you can also obtain offers from different banks. You will then be able to compare them in order to choose the one that best suits your needs. From then on, all you have to do is to put together an application for a personal loan.
Putting together a personal loan application file
The personal loan application file consists of supporting documents relating to the borrower’s civil status, resources and assets. These documents include
- A copy of the identity document,
- A statement of postal identity (RIB),
- A proof of residence,
- A copy of the last pay slips if you are employed,
- A copy of the property tax if you are an owner,
- A copy of the last tax notices for the retired and the non-salaried and
- The amortization tables of the current loans.
The file thus constituted will then be presented to the banking institution. The latter will then study it. This study will consist in determining your solvency and your capacity of refunding. The bank will also take care to protect you from all risks of overindebtedness.
After studying your file, the bank may or may not agree to grant you a personal loan. In case of a favorable opinion, the bank will make the requested amount available to you. It will then be up to you to pay it back according to the terms of the contract.
How is a personal loan repaid?
The** repayment of the personal loan **is done according to monthly installments calculated in advance. This repayment includes not only the amount borrowed, but also the related costs. This includes the possible insurance costs, the loan interest and the file fees. The monthly instalments for the repayment of the personal loan can be fixed or variable.
Otherwise, the repayment of the personal loan can also be done by anticipation. This early repayment can be partial or total. In all cases, it will be done in return for a penalty. The amount of this penalty is generally around 1% of the amount of the loan.
What about personal loan insurance?
Although not mandatory, you can also subscribe to an insurance when you take out a personal loan. This** borrower’s insurance **will allow you to face the possible hard times of life. It can be a death, a long illness, a dismissal or an accident at work. In any of these cases, the personal loan insurance will secure the repayment of your credit.
To secure the repayment of your personal loan, you can opt for the insurance offered by the credit institution or take out an external insurance. The latter has the advantage of offering you more freedom. You will be able to choose the insurance best suited to your profile. Apart from this freedom, an external and personalized insurance also has an economic interest in most cases.
In short, the personal loan is appreciated for its flexibility. It gives you the freedom to finance the project of your choice. To obtain one from a bank, you must make a personal loan simulation before putting together a file to be submitted to the bank. For the repayment, you will be able to opt for fixed or variable monthly payments. Also, you will have the possibility of opting for an early repayment, in return for a penalty.