Choosing a bank loan: our advice
The subscription of a credit is an engaging act that requires a lot of thought and preparation for the borrower. Here are 7 tips to read before taking out a bank loan, to be sure you have not forgotten anything!
1. Be certain of your creditworthiness
Before thinking of taking out any bank loan, a future borrower must be sure of his solvency. Indeed, a credit is committed and must always be repaid by the person who contracted it. It must therefore have a good readability of its current financial situation, but also of the future, and be able to say that it will allow him to pay the monthly payments throughout the life of credit. As a result, the borrower must also be able to anticipate a possible decline in his income. If he already has a multi-credit liability, the credit redemption with a cash release may be the appropriate solution to his situation. In all cases, it is understood that in general, the debt ratio for an individual wishing to take out a new loan can not exceed 33%.
2. Find out about different types of credit and any help
The borrowing panel offered by banks and credit platforms is extremely broad, and each individual’s financing needs can in principle be filled by one of the existing types of credit. The future borrower must take the time to learn about the different categories of credit available, and the types of projects they can cover. The personal loan is for example a credit that is not dedicated to finance a specific purchase, which can make it very useful to carry out a personal project, while it should focus on a credit allocated for the purchase of a property (car) or the realization of work. The individual must also learn about the various assistance that exists in France for borrowers, especially for real estate projects.
3. Choose an approved lending institution
There are many players in the credit market: banks, lending institutions, but also online platforms. Banks and conventional organizations are well established and as such have greater credibility, but their operation also imposes additional costs that are felt on the terms of borrowing they offer. In contrast, there are many players on the Internet and not everyone has the shoulders wide enough to meet their commitments. How to navigate? By favoring a credit platform approved by the Prudential Control and Resolution Authority, as is the case for Younited Credit.
4. Play the competition
Between the many existing banks and credit platforms in France, the credit market is very competitive. In order to make this competition work, the individual must strive to solicit many financial organizations to ask for quotes or simulations of loans, whether online or in physics. He will then have to compare the various loan offers made to him following his various requests, with particular regard to the proposed APRC. The annual percentage rate of charge, which includes all credit-related costs (nominal interest rate, compulsory insurance, potential application fees), is the clearest benchmark for the individual.
5. Compare the proposed rates with the rate of wear
This is the law: the rates offered in France by financial institutions can in no case be higher than the rates of attrition set by the Banque de France. These official rates are calculated and communicated at the end of each quarter by the French central bank, to avoid abuses on the part of credit institutions and thus protect consumers. If the rate of a financial institution is higher than the current rate of attrition, it must obviously not be accepted.
6. Prepare your file
After choosing the type of credit that suits him at the best rate, the future borrower must build a file to attach to his loan application. This file should be well prepared for the banks and credit facilities solicited to grant the loan. In addition to presenting all the financial guarantees, and ideally a personal contribution, the file must be clear and complete (proof of identity, monthly expenses, pay slips, employment contracts, tax statement, etc.). It is quite possible to get help in the editing of his loan file by asking a professional (lawyer, broker, etc.) his opinion or the completion of a few hours of work.
7. Read with the greatest attention the offer of loan agreement
Once the loan application is accepted, the financial institution communicates to the individual a pre-contract offer which must include all the characteristics of the loan. A summary of these must also be notified at the beginning of the contract to help the consumer understand the contract. In particular, the individual can see if any non-compulsory insurance has been added. When reading the personalized loan contract offer, the consumer must make sure that the terms of repayment of the contract suit him well. If the borrower does not agree with the terms of the loan agreement, he may refuse to sign the offer, and even has a withdrawal period of 14 days after the signature of the contract.