Borrowing money and loans in France
Since almost forever people needed money to procure goods and services, in order to fulfill their needs. Given that in general, people’s needs exceeded their actual capabilities to acquire those goods and services, banks have appeared in our societies to provide the missing resources and they have evolved to be generally accepted as institutions that can supply the money for people’s and companies’ needs. Over time, banks’ offer of credits has become more and more sophisticated, up to the point where some banks have specialized in specific types of credits such as consumption credits or micro-credits. This being said, what are the type of credits in France, what someone willing to contract a credit needs to know before contracting a credit and how a credit aggregator can help you?
What are the type of credits in France?
First of all, one needs to know that credits are differentiated first based on the type of goods acquired via the credit (i.e. real estate, car, motorcycle, house renovation, private events, etc) and second based on the extent to which the good needs to be presented as guarantee or not (real estate vs. car vs. household appliances vs. personal project). For instance, the acquisition of real estate via credit implies that invariably the good becomes the very guarantee, that will be executed if the credit is not paid back, while the acquisition of a TV set requires way less formalities and the TV set, in principal, does not become the guarantee. The type of good acquired will also trigger the maximum amount of money that the customer can ask from the bank, the level of the interest, and the maturity of the credit (i.e. after what period the credit needs to be reimbursed in full).
Real estate credits
The credits related to the acquisition of real estate are by far the most complex ones. They imply, among other things, formalities such as the evaluation of the real estate, the acquisition of insurance for both the good and the buyer, and last but not least a certain level of solvency of the customer. Yet, unless one is a real estate professional investor, for most people, this type of acquisition happens rather seldom during the life time, or even only once.
Auto / Motorcycle / Camping cars credits
On the contrary, the credits to acquire goods, other than real estate, are rather popular and the banks offers have very much diversified in this respect in the last years. For instance, the second most important asset in people’s life appears to be the car and/or the motorcycle. In general, people change their car with an average of 4 to 6 years (nowadays, potentially even more than 6 years) and therefore, unless the car is down-paid, people call their bank for a credit. The banks have developed specific types of credits for such acquisitions and in general, the credit is guaranteed with the car and/or motorcycle. The formalities are less important compared to the acquisition of real estate and sometimes they are dealt with by the very dealership, which often has partnerships with the banks. Many banks have extended their offers for credits not only to brand-new cars but also to second-hand ones. Last but not least, besides the cars, this type of credits can also cover camping cars, a quite demanded item lately.
Even more often than buying a car, people call their bank to get a credit in order to acquire different goods that happily accomplish their lives. From organizing their marriage, to acquiring a new TV set, going in holidays or paying for their studies, people call their banks for personal credits that have diversified to a large extent lately. Legally treated as “credits a la consommation”, note that in France the personal credits are well regulated. For instance, since 2010 the personal credits cannot be higher than 75.000€ (Lagarde law) or 6.000€ for revolving credits.
The personal credit can be used for all sort of needs of the customer and, in principle, the customer does not need to provide justifications to the bank with respect to how the money will be used. Despite the limited number of formalities that the customer needs to undertake for the personal credit, note that in France, the lending of money, in order to be considered as credit and be legally treated as such, the maturity (i.e. duration) of the personal credit should be higher that 3 months. The revolving credit can be used as “working capital” facility which the customer can call when she/he needs and for a certain period of time. The main difference between the personal credit and the revolving credit is that the former has a fix interest while the latter has a variable one. Last but not least, in case of the revolving credit, if the amount is less than 3.000€ the bank wouldn’t ask for guarantees at all, but the credit cannot be longer than 36 months.
House renovation and decoration
To get credit to renovate or decorate their house, people call their banks less regularly than for personal credits, but more often than for the real estate credit, thus the banks have a diversified set of credit propositions for the customers. In addition, since Covid-19 crisis has forced people to spend more time at home, this type of credit has become even more popular lately, as people have looked at embellishing and easing their new working environment. Banks are rather generous in terms of amounts, and the credits can go up to 75.000€, which means that the banks consider this type of credit as a personal one, for which they don’t require justifications.
Rachat de credit
Sometimes having several credits, covering different needs, can be cumbersome for the customer. One needs to be dealing with different interest levels, different payment deadlines, different formalities or even different banks. It is why, searching to ease the customers’ lives, the banks have developed a type of credit that aims at helping customers to deal with only one credit, while the credit would fund the acquisition of different goods. Here it is the rachat de credit. Via such a credit, the bank will bundle all the credits of the customer under a single one, which implies for the customer a single interest rate and hence more visibility on her long term spending and most importantly, a single payment deadline. Yet, it is to be noted that since this type of credit would blend several credits, each of them with a different risks, in general, the rachat de credit comes with a higher interest level than the composing credits, but in terms of amount to which the customer can get access, it may go beyond the limits of the personal credit.
What are the formalities the client needs to undertake in order to get a credit?
In terms of formalities to be filled by the customer when she/he asks for the credit, note that you, as a customer, will be required to fill in a questionnaire and provide information such as, personal information about yourself, the type of credit, the amount required, the duration and the number of installments. You will be communicated the annual percentage interest rate, which includes all the costs, including interest, to be paid in addition to the borrowed capital, or insurances, if they are legally required. Note that you have the right to retract the credit before signing the contract, as well as you have the right to pay the credit in full before the credit maturity, but note that this option may imply additional costs for the client. Last but not least, you, as a customer, will need to commit that the credit will be paid in full by checking the box “Un crédit vous engage et doit être remboursé. Vérifiez vos capacités de remboursement avant de vous engager”.
How can a credit aggregator help you?
The multitude of banks on the market and the products they offer has increased the complexity of the credit world and consequently may have confused even further people in search to finance their projects via credit. If in the world of yesterday, the consumer needed to knock to several banks’ door to get credit offers, which required quite a lot of time, nowadays Internet offers better opportunities. Not only you save time, as going to a bank and meet the desk officer is not anymore needed, but also, at several clicks distance, you get offers from several banks, you can compare them in real time and decided what is best for you. In addition, keeping the interaction with the bank at digital level by limiting the interaction with the bank’s physical offices may protect you even further given the current public health challenges, although the banks are making their best in this respect. In fact, this is exactly what a credit aggregator can do for you.
At www.banqo.fr we do this job for you, which means that should you need money for a specific project, we will present you the offer of different banks, for you to chose what is best for you. Therefore not only you will save time and resources but also you will be able to implement your project as soon as you are ready to get the credit. No commitment from you side, only valuable information for you. Yet, you need to remember that when you decided to contract a credit, this has several implications for your (financial) life, as ultimately you need to commit that the credit will be paid back.