Consumer credit is a simple way to finance many projects such as a wedding or the purchase of a car. For this there are different types of consumer credit, the conditions of which adapt according to their use.
The personal loan allows the purchase of goods without proof. Thus the borrower spends the amount borrowed as he sees fit to finance the projects of his choice. Personal credit can therefore be used to balance cash, but also for various purchases (furniture, vehicle), work or a trip. The duration and the amount of the loan are defined at the start, they cannot be adjusted afterwards. This allows the borrower to know in advance how much he will pay back each month and when his loan will end.
Unlike the personal loan, the credit affected relates to a specific purchase. The borrower must explain and justify his purchase (cars, household appliances, furniture). The amount borrowed must then be exclusively spent on the acquisition of this property. If the sale is not made, the credit is therefore canceled.
Revolving credit, also called revolving credit, is not intended for the purchase of a particular asset. It is made to finance daily expenses. The borrower uses the part of the credit he wants, he is not obliged to use the whole amount. Interest is then only deducted from the amount used. If the terms of the revolving credit are more flexible, in return the rate is variable.
Rental with option to purchase (LOA)
LOA is particularly used for the purchase of a new car. The borrower leases the vehicle from the lending institution for a given period by paying monthly payments. On the date defined by the contract, the borrower can choose to buy the property at the price fixed beforehand, or to return it to the lessor.
As the name suggests, free credit induces a zero interest rate for the borrower. The amount borrowed is therefore equal to the amount repaid. It falls within the scope of consumer credit if the repayment duration exceeds 3 months.