Are you lost among all consumer loans? It’s normal, financial institutions offer a lot! But don’t panic, we will help you find your way. We will explain to you precisely what an installment loan is and how to benefit from it.
Borrowing money is a decision worth considering. In the case of consumer credit, you will get a boost to finance your personal projects. Is that what you want? Perfect, let’s take a closer look at this formula.
What is an installment loan?
An installment loan is a consumer credit intended for private purposes. It is granted to individuals wishing to buy movable property such as a car and a computer or a service such as the organization of a wedding.
More generally, it also allows you to cope with unforeseen expenses without having to dip into your savings and to assume various costs. They can be those related to the renovation of a home, vacation booking or studies. In short, the possibilities are many.
In theory, this type of loan does not require proof of use. In practice, however, many lenders customize the names of their products and design them for a specific type of need. You will find car loans, vacation loans or work loans such as green energy credit which are indeed part of personal loans.
If you wish to acquire a specific good or service, you can also go through the installment sale. This form of credit is encountered, for example, when you buy a television in a supermarket and the supermarket offers to pay you for it in installments. The principle remains the same as if you apply to a specialized lender: you must repay the amount provided on regular dates and know the total cost of the credit directly.
How does the reimbursement work?
A tailor-made refund:
With an installment loan, you agree to repay the amount of money made available to you on the dates determined in your contract. In consultation with your banker, you set the amount of your monthly payments and choose the duration of the loan. The goal is of course to always ensure that you have sufficient financial resources to live comfortably.
If the principle of installment loan is attractive, it still deserves some warnings.
Indeed, its interest rates and handling fees are generally quite high. This is explained in particular by the fact that it is not linked to a specific purchase. It can therefore be expensive compared to the market rate.
Also, be aware that the interest rate varies depending on the amount and duration of the installment loan. Regarding the amount borrowed, it depends on your needs and your financial situation. It can therefore amount to a few hundred euros or several tens of thousands of euros. As for the duration of repayment, it is limited by law and is determined according to the amount of the loan.