Personal loan: what are its terms and conditions?

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A personal loan is a simple way to finance all kinds of purchases or projects. It can also offer great flexibility if it is not earmarked for a specific purchase or project. Before taking out a personal loan, be sure to check the rates offered by the banks.

Definition of a personal loan

For various purchases, to carry out a project of any kind or to deal with unforeseen circumstances, you can use a personal loan. Its main characteristics are :

  • Its amount may not exceed EUR 75,000
  • Its duration is between 3 months and 5 years.
  • The lending institution must have a approval by the Banque de France.
  • It is a fixed-rate creditThis means that the rate is unchanged for the entire duration of the loan. This rate depends on the value and duration of the loan.

It is important to turn to a comparator to take out a personal loan at the best rate. Some sites also offer simulations to find out the monthly payments according to the duration of the loan, the amount borrowed and the interest rate. It is also advisable to use the APR as the main criterion for comparison and not on the nominal rate.

To get the best rate, you also have the option of negotiate with your banker especially if you have a good profile and have been with the same bank for a long time.

Once you have decided on a financial institution, make sure that the contract mentions all the details of the credit. Also make sure that the charges applied are not outside the law. For example, you should find the registration fee, the application fee and the loan insurance fee. Finally, find out the bank's policy on early repayment and any additional charges that may apply.

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Affected and unaffected personal loans

There are two types of personal loans, the affected personal loan and the unaffected personal loan.

The affected personal loan

It concerns a purchase or project that must be specified to the lending institution. To do this, you must send the institution concerned the documents that justify the use of the sum lent.

Non-allocated personal loan

The lender can use the loan amount as he or she wishes. It can be granted without proof and is an interesting alternative to revolving credit since, unlike revolving credit, the duration of the loan is fixed in advance. However, the lender considers that the risk is greater and therefore charges a higher interest rate. Furthermore, the borrower has no no protection if the product purchased is unusable and must continue to repay its credit.

Why compare rates?

Your bank offers you a rate for your personal or property loan and you intend to sign your contract quickly. However, by looking very carefully at rate comparison sites such as Making a loanYou will find that the percentages can be quite high among competitors. Of course, the files are studied in detail by the advisers, but you can already get an idea with such a comparison of the organisations.

  • At Cofidis, you can get 3.6 % over 48 months.
  • Carrefour Banque stands out with 1.5 % over a maximum of 24 months.
  • Cetelem even offers you 1 % during a promotional offer.

These three examples are enough to convince you to compare all the rates, because they are not the same from one organisation to another. Moreover, you are not obliged to take out a loan with your bank, you can carry out several simulations with competitors in order to get the best value for money. If the results of the comparison meet your needs, you can also approach the advisers. They will then offer you a much more precise contract.

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Is online credit worthwhile?

You have two categories, the traditional banks that have physical shops and the online versions that exist only on the web. The main difference is that there are no premises, which reduces fees and therefore costs. For this reason in particular, rates can be more attractive for web-based organisations. In addition, you have other advantages even for a current account, because the application fees are often offered as well as the bank card.

Taking out a policy on the Internet is also very simple, since all the steps are taken via the forms. You use the simulator to obtain a proposal and send your file to the advisor who will study it with the utmost rigour. A reply is generally sent within 48 hours and if the loan is granted, it is possible to send all the documents via the Web. It is simple and very fast because you do not have to go anywhere.

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