Consumer credit, what is it?

Consumer credit is a loan that concerns operations other than those relating to real estate. It responds more particularly to a cash flow requirement of a borrower wishing to finance the purchase of consumer goods.

It is therefore not necessarily an affected credit, that is to say a credit that is triggered on the purchase of a product and the presentation of its invoice (as for car credit). A consumer loan is granted by a specialized credit institution or a bank to the extent that the borrower is able to repay it.

Thus, all borrowers must know their consumption borrowing capacity before applying for consumer credit and learn about the borrowing rates offered by the consumer credit market.

What are the different types of consumer credit?

In addition to the previously mentioned affected credit, which requires the borrower to justify the use of his loan, there are many other forms of consumer credit. The most common are personal loans and revolving credit, also called revolving credit, replenishing credit or permanent credit.

In both cases, the borrower is free to use the amount of his loan as he sees fit, depending on his project (renewal of furniture or household appliances, purchase of a new car, financing of renovation works. home improvement or development, etc.).

Note: the notable difference between revolving credit and personal credit.
Revolving credit is distinguished from personal credit by its flexibility, but also by the fact that it is not or little amortisable. Concretely, the borrower has a certain amount of money, which he can use in whole or in part. The available credit is then reconstituted as and when repayments are made. Interest, meanwhile, is only due on the amount actually borrowed: this credit can be an incentive to overconsumption and at «Silke Group», we recommend instead opting for a quick mini credit.

Mandatory information to be provided by the lender.

Whatever the type of consumer credit, lending organizations (banks or credit institutions) are required to inform any potential borrower before establishing a credit contract.

The borrower must indeed have all the information allowing him to know whether the credit is suited to both his financial situation and his needs. Thus, the proposed contract offers must in particular mention:

• The total amount due.
• The interest rate.
• Monthly payments.
• Conditions of availability of the borrowed sum.
• The cost of any borrower insurance.
• The duration of the contract.
• The period of validity of the offer.
• Minimum time for reflection.
• The withdrawal period (14 calendar days).

Consumer loan: what amount can be borrowed, and for what duration?