Consumer credit simulation
Since the early 2000s, the Internet has grown widely in United States. In 2013, 73% of French people had direct access to the Internet compared to 31% in 2004. This important development has allowed the emergence of many Internet sites on the web offering new tools and new means of distributing goods and services. Depending on the new needs of consumers, credit institutions have adapted and some have specialized in online sales.
Before this development, the consumer had to get closer to his bank if he wished to benefit from a payment facility when purchasing a consumer good or service. Over time, other establishments have offered these payment solutions. Initially, it was the large distribution brands themselves who offered an alternative to bank loans stricto sensu. Thus, during his purchase, the consumer could benefit from support in order to pay for his property in several installments for example.
Today, the Internet has allowed the emergence of many sites specializing in consumer credit in order to allow consumers to buy a car or even finance work or a wedding. These sites can also allow the pooling of credit (consumer and possibly mortgage) and offer insurance guarantees often not offered by traditional insurers (new emerging risks).
These sites generally offer payment solutions in the order of personal loan or revolving credit according to the borrower's need. The development of these sites was done fairly quickly in that they were very quickly accepted by the French because of their apparent ease and speed.
Indeed, these websites (Cetelem, Sofinco, Cofidis, etc.) allow borrowers to simulate their loan application from home (or elsewhere), at any time of the day and week. They are not restricted to the opening hours of a point of sale but can still benefit from telephone support if they wish. He will no longer have to travel to several establishments with a storefront in order to obtain several offers. The consumer will only have to indicate "consumer credit" in his Internet search engine to be directed by many sites allowing him to make a simulation and possibly to apply for a loan later. All consumer credit websites allow consumers to simulate their request before actually asking for an offer. At no time, at the simulation stage, is the consumer engaged with a credit institution.
As a result, the consumer is free to carry out the number of simulations he wishes. In this sense, he will be able to compare different offers and choose those which appear to him the most advantageous and correspond to him the best. He can also do simulations without really intending to make a request, for a future project or out of simple curiosity.
These simulations will allow the borrower to better understand the borrowing process. He will be able to see for himself over what period he commits if he borrows such or such amount. He will realize that the longer this period, the higher the cost of credit (greater risk weighing on credit institutions). He will be able to choose his monthly payments according to his repayment capacity. Having the ability to perform loan simulations empowers the borrower. It is no longer a third party who determines the amount borrowed as well as the duration of the monthly payments. However, there may be a perverse effect on this freedom. The borrower being a layman, he will not necessarily be aware of the risks to which he is exposed. Although each file is studied after the loan application, the borrower may never have been accompanied during it and could not have had professional advice. In order to avoid this situation, the Internet sites offer technical sheets accessible to all defining the various credits offered and explaining the various procedures. However, these sheets are not objective since they are written by the lending organizations. The goal is still to attract consumers and convince them to apply for a loan.
As part of its consumer credit simulations and possible requests, the borrower is advised to carry out some research, in particular on government sites concerning his commitment and on the practices implemented by these establishments. It is not uncommon for individuals not to conceive of the risks to which they are exposed by choosing to resort to consumer credit. Because of the often low amounts, the borrower is sometimes not aware of the commitment that will link him with the credit institution. He will not necessarily think of the consequences of non-payment of some of these monthly payments (during the possible loss of his job or of an unforeseen event) or of the transmission of his debt to his beneficiaries in the event of his possible death.
The credit institutions present on the Internet offer generally identical credit simulators. This allows the borrower to compare different offers by analyzing similar criteria. Indeed, at first, the simulator always asks the borrower to indicate the nature of his need. For example, he should select “purchase a car”, “work”, “marriage”, etc. Depending on what it selects, the simulator will offer a sometimes different solution (affected loan, revolving credit, etc.). Once his need has been informed, the borrower determines the amount he wants as well as the duration of the loan (or the amount of monthly payments).
The same questions come up on each simulator. Once the search has been launched, each will generally include in its result the amount requested, the amount of monthly payments and / or the duration of the loan, the APR applied as well as the overall amount of the loan (amount borrowed added to the interest due lender). The APR takes the fixed debit rate of the credit to which will be added the various fees applied by the organization (various costs, commissions and various remuneration). Everyone is free to apply the rate they want, to apply processing fees if they wish.
Thus before making several requests, the borrower can already select the credit institutions according to the result of the simulation by comparing similar elements (same amount borrowed, same duration of credit). This can save him time insofar as at the simulation stage, no personal information is required by the borrower. These data will only be completed if the borrower applies for credit following the simulation. In addition, the simulation is done very quickly, with a few clicks. This allows the borrower to compare different offers very quickly before having to enter their personal information which takes more time.
Simulations allow the borrower to really modulate his request as he wishes and to be able to simulate all his desires. Some simulators are very well done. By staying on the same page, the borrower can move the sliders allowing him to choose the amount borrowed and the amount of monthly payments and obtain the result of the simulation. These simulators are visually attractive and easy to use. The borrower will be tempted to "play" with these sliders in order to know the maximum loan amounts authorized and to increase or decrease the monthly payments.
In order to determine which offers would suit him best and are more attractive, the consumer is free to go to each website of each credit institution. On each simulator, he will have to fill in the determining elements for his loan application each time (amount, duration of the loan and monthly payments). If desired, in order to save time, the borrower can go directly to a consumer credit comparison site. He will simply have to indicate "credit comparator" on his search engine and dozens of results will appear and direct him to a comparison site.
He will then only have to fill in the information concerning his request once and the comparator will search for the best credit offer for the consumer on various sites offering consumer credit solutions. Consumers should note that these comparison sites do not list all the credit institutions present on the Internet.
In general, comparators (credit or other) will compare a determined number of sites with which they sometimes have partnerships. Some comparators also sometimes belong to establishments that will appear in the results. By going through a comparator, the consumer may sometimes benefit from special offers negotiated between the comparator and the credit institution.
In order to verify that the best result of the comparator is really the best, the consumer is free to carry out his research on different comparators. He will thus be able to verify that the different results provided by one comparator correspond to the results provided by another. In addition, he will also be able to obtain different offers to the extent that each comparator can work with different consumer credit websites.
The simulation of a consumer credit is an important step for the borrower, who can compare different offers and determine the most attractive offer. The simulation will also allow him to adapt his offer to his needs and his repayment capacities.