Consumer credit application: what you need to know
Do you have a project to finance and are considering taking out a consumer loan but do not know what type of loan best suits your needs? You are in the right place. Know that there are different types of consumer credit and that it is important to know them to better focus your research. What is consumer credit? Where and how to make a request?
What exactly is consumer credit?
First of all, you should know that consumer credit is a type of credit that only concerns individuals. Intended to finance a purchase: a new car, new equipment, work in a house, household appliances, etc., consumer credit is granted by a financial institution and can be of different types.
For individuals, consumer credit is often opposed to real estate credit, contracted to finance the acquisition of real estate. Compared to mortgage loans, consumer loans are characterized by lower monthly payments, a shorter repayment period and differ in the nature of the guarantees required. In the United States, consumer credit is largely taken care of by specialized financial institutions and the sales process is strongly framed by regulatory measures intended to limit situations of over-indebtedness.
There are two main types of consumer credit: assigned credits and unallocated credits. Affected consumer credits relate to credits linked to a particular purchase while unallocated consumer credits are not linked to a specific purchase. The borrower then freely disposes of the borrowed amount. These are personal loans, revolving credits, rentals with option to purchase (LOA) and authorized account overdrafts.
The main types of consumer credit
There are different types of consumer credit. Among the best known, the personal loan, which falls into the category of unallocated loans. Here, the rates are fixed and the repayment is monthly. The only requirement is that the loan amount does not exceed 75,000 US dollars.
Revolving credit, formerly called "revolving credit", is replenished as the borrower repays it and allows the borrower to have a reserve of money that he can use freely. The duration is set at one year, but can be extended if necessary.
Leasing with an option to buy is a special type of credit that only applies to cars. This type of contract, also called “leasing”, is generally used when financing a vehicle. The bank buys the vehicle that the borrower wants to use and leases it to the borrower. At the end of the contract, the user can become the owner of the vehicle in exchange for paying a price determined in advance.
Finally, an overdraft authorization on a bank account is considered a consumer credit although no sum of money has been loaned.
How to obtain a consumer credit?
To apply for a consumer credit, nothing could be simpler. As we have seen, different types of consumer credit exist and it is essential to differentiate them well before embarking on a project. Thus, you will be in a better position to find the consumer credit that best suits your needs.
Now, many financial organizations offer their clients to make online requests. Simple and fast, online requests prevent you from having to travel and allow you to move forward in your project at your own pace.
Be careful, however, it is important or even essential to compare banks with each other. Now, several online credit comparators are available and allow individuals to see more clearly. This tool sorts the innumerable proposals and presents individuals with the offers most suited to their research. The credit comparator also offers the possibility of carrying out a credit redemption simulation. Indeed, if you already have one or more consumer loans, bringing them together into one can avoid over-indebtedness.
Apply for consumer credit
The easiest and fastest way is to submit your request directly online. A few questions will be asked and will allow the chosen organization to better understand your personal project. Supporting documents may also be requested from you (identity document, pay slips, current credit, etc.) in order to judge your capacity to commit and repay your monthly payments. Once these supporting documents have been sent directly via the internet and the consumer credit request has been made, the organizations will respond to you soon. Now it's up to you to make the right choice.