Personal loan, earmarked loan, revolving credit… Decryption of the various consumer credits. Consumer credit concerns loans up to 75,000 dollars , which are not intended for the purchase of real estate. The rates remain very variable depending on the amount borrowed, the repayment period, and the promotional offers from establishments!
Personal loans, restricted loans and revolving loans are the main consumer loans. They have very specific characteristics.
The borrowed funds are made available to you in your bank account all at once. The rate is fixed. The amount of the monthly payments and the duration of repayment are determined at the signing of the loan. You do not need to justify the use of credit, even if for marketing purposes personal loans are sometimes called “students”, “equipment”.
Credit assigned or linked to a purchase
Very often, this type of loan concerns the acquisition of a car. This credit is linked exclusively to the purchase of a good or service. The rate, duration and monthly payments are determined as for a personal loan. But the sales and loan contracts are linked together. If one of the two operations is not carried out (the goods are not delivered or the loan is not granted), the second operation is legally canceled.
The lender provides you with a credit reserve, renewed each year, from which it is possible, at any time, to draw money, ie to borrow. You only repay interest from the time you use your reserve. As soon as you use all or part of this reserve, you pay a minimum monthly payment which gradually replenishes it.
The rate of a revolving credit goes up or down, depending on the evolution of rates on the financial markets. You use and repay your credit at varying rates. It is therefore not possible to know at the outset the total cost of the loan.
At any time, you can repay your credit before the scheduled end, in whole or in part. It’s free for revolving credits. For personal loans, it is also free if the amount reimbursed is less than 10,000 dollars over a year. Beyond this, the lender may request the payment of compensation, up to a limit.
Beware of promotional rates!
Very often, our mailboxes are full of offers of credit at record rates. But beware! The best rate conditions are often granted for loans of a relatively large amount (10,000 dollars for example), repayable over a short period (generally over 12 months). As soon as the duration of the credit is extended, the rate goes up and the cost of the credit too.