The personal loan is part of the consumer loans . It is a credit agreement according to which a sum of money is made available to the consumer, and which will be reimbursed by periodic installments.
It is intended not to finance a specific purchase as for an assigned loan, but to enable the borrower to meet expenses such as costs resulting from family events, medical costs, education costs, expenses. ‘taxes, renovation costs, etc.
As it is not linked to the purchase invoice of a specific good, the interest rate charged is higher than that requested for the financing of a specific purchase, because the bank does not have any real guarantee. (related to one thing) as is the case for financing a car with a car loan or a home with a mortgage.
The personal loan is not justifiable and like a revolving credit, it does not require a commitment with the lender. A contract called a “prior credit offer” allows the agreement between a third party and the lender to be put into practice. The amount, rate and conditions of repayment are set there.
The personal loan is therefore a consumer credit intended to finance personal needs or the purchase of everyday consumer goods. The monthly repayment installments do not replenish an available reserve.
How does a personal loan work?
The personal loan or installment loan is composed of a capital corresponding to the sum loaned to carry out a project. Repayment is always monthly. The period during which the funds are made available is determined at the time of subscription.
Personal loans are distributed by credit institutions. It is easier to negotiate than the affected loan. The disadvantage results from the fact that not being linked to a specific purchase, if the good turns out to be defective or if it is not delivered, it is still necessary to continue to reimburse it.
What is a personal loan buyback?
The borrower has the possibility, if he wishes, to resort to the repurchase of personal loan . The repurchase of personal loan consists in the resumption of one or all personal loans by a banking organization allowing to reconsider the amount of the monthly payments paid, to renegotiate the applied rate, to give new terms to the credit and also to modify the duration of its reimbursement.
The repurchase of installment loan applies to owners as to tenants. In addition, it can be done without guarantee if it is less than 90,000 euros. A solution that helps mitigate the risk of over-indebtedness.