Consumer credit is a credit granted to the individual to finance a service or a consumer good such as an automobile or a kitchen for example.
According to Article 311-1 4 ° of the Consumer Code, consumer credit commits the borrower to repay the total amount due within a fixed time limit.
What are the main consumer loans?
- The appropriated credit is a credit allocated to the purchase of a good or a service. For this type of credit, the borrower must mention that the purchase of the good or service is conditioned by obtaining credit. As such, if the borrower does not obtain the credit or if he cancels the purchase order of his purchase, the credit is automatically canceled.
- The personal loan for which the borrower can use the money as he sees fit. The borrower is not obliged to communicate the nature of his purchase.
- The revolving credit, previously called permanent credit or revolving credit, is offered by banks, credit organizations and supermarket chains. It is more generally allocated as a cash reserve that the borrower uses in one or more times without exceeding the maximum amount allowed. The reserve of money is reconstituted as and when repayments in the form of monthly payments such as for a personal credit. The interest paid is only on the amount of the expenses and not on the amount of the money reserve. This type of credit is often characterized by high interest rates and low monthly payments.
- Free credit, which is characterized by a 0% rate. The borrower does not pay his product more expensive!
Who is the consumer credit aimed at?
Any major person provided that it can repay its commitments.
What are the necessary steps to take out a consumer credit?
Consumer credit must respect three stages:
- Stage 1: Information
- Step 2: the return of documents
- Step 3: Follow-up (special case of reconstitutable credit)
Step 1: Information to the borrower
This phase allows both parties to collaborate in the best conditions:
- For the lender, this phase ensures that the borrower is able to repay the amount borrowed and related fees.
- For the borrower, this phase allows him to know precisely the extent of his commitment.
Before signing, the lender must therefore ensure the solvency of the borrower by asking for any evidence related to his home, his identity and his income. It informs the borrower of the consequences of the credit on its financial situation and ensures its solvency by consulting the national file of payment incidents. It must also provide the borrower with specific information to compare the proposed credit offer. As for the borrower, he must know precisely the extent of his commitment.
The lender must therefore provide him with specific information such as:
- the complete identity of the credit institution
- the type of credit
- the amount of the loan and the conditions for the allocation of the funds lent
- the repayment term and the frequency of the payment dates
- the total amount due, specifying the amount of the fees, the annual APR rate and the withdrawal period
- the amount of compensation in case of delay and non-payment
- the financed product in the case of a credit affects
- the articles of the code of consumption which specify the terms of the collaboration
- a copy of the credit agreement
Step 2: handing over documents
The borrower knows the extent of his commitments and has all the information to compare. The lender, for its part, has made sure of the solvency of his client. Both parties therefore undertake an informed agreement and the contract can be signed. Attention, the lender must specify to the customer his withdrawal period.
Step 3: Follow up
In the case of a cash reserve, the lender must send the borrower a monthly summary of the status of his credit.
How long can we borrow?
Since May 1, 2011, all loans are subject to the Cogilaw Company which imposes repayment rates of up to 3 years for amounts borrowed less than $ 3,000 and up to 5 years for larger amounts.
What are the loanable amounts?
- Assigned credit : from $ 200 to $ 75,000
- Personal credit : from 1500 $ to 75000 $
- Repeatable credit : The maximum amount of the reserve is set by the lender. It gives you the right to a private card.
What are the withdrawal and withdrawal periods?
The borrower has a 15-day cooling-off period to accept or reject the offer. During this period, the lender does not have the right to modify the conditions indicated on its offer. Once signed, the borrower has 14 additional days to retract.
After 14 days, and without a written event with acknowledgment of receipt, the contract is considered “accepted by the borrower”. Whether it is accepted before or after the withdrawal period, a 7-day waiting period is applied from the date of acceptance. During this period, the bank can not make any payment and the borrower can not make any refund.