Do you have a consumer project: carry out work, buy a new car or go on vacation? Here is our good advice before taking out a consumer loan in the run-up to the end-of-year holidays and sales…
What are the different consumer credits?
There are several types of consumer credit to finance your projects. With an envelope of between 200 and 75,000 USD, consumer credit allows you to materialize your desires without affecting your savings.
First, the personal loan. This loan is a sum of money delivered by the lender in one go. The borrower can freely use it to finance all types of projects (leisure, equipment, travel, etc.).
The affected loan is directly linked to the project it is used to finance. It is frequently dedicated to the acquisition of a new vehicle. Unlike a personal loan, if the sale or delivery is canceled the credit is also canceled.
Rental with option to purchase (LOA) is also a form of consumer credit. This formula is popular with borrowers because it allows you to rent a car for a period indicated in the contract and then buy it at the price of its residual value.
Make the comparison between car loan and LOA in order to find the most suitable solution for your project.
Finally, the revolving credit also called revolving credit. ” It is a credit that is expensive, the rates vary up to 18/19%, ” notes Andrea Fille, director of communications and studies for Lite Lender in her latest video on Periscope dedicated to consumer credit. Revolving credit is a reserve of money that a lender makes available (often linked to a payment card). The borrower reimburses interest only on the amount borrowed and not on the entire amount available.
Our good advice before taking out a consumer loan
“The range of consumer credit rates is very wide between 1.50% and 10%, ” she continues. To minimize the cost of your financing, Lite Lender gives you its advice and tips.
First, compare consumer credit rates by looking at the overall annual effective loan rate (APR). This rate will allow you to compare the offers of consumer loans whether it is a personal loan or a restricted credit. It includes the credit rate (nominal rate) and the administration fees if applicable.
How do consumer credit rates vary?
The consumer credit rate varies depending on:
- the amount borrowed,
- the length of time you borrow,
- and the type of project.
You will therefore not have the same consumer credit rate if you take out an assigned credit, a revolving credit or a personal loan.
Simulate your loan by modifying the duration and the amount
“The shorter the duration, the larger the amount and the lower the rate, ” says Andrea Fille To borrow for a short period, you obviously have to be able to repay the credit. The trick is to perform a consumer credit simulation by modifying the term or the amount borrowed. For example: for a funding requirement of 3800 USD, try with 4000 USD or 4200 USD. You can benefit from a better rate with a small amount difference.
Compare consumer credit offers
” Compare the offers of your bank, it may have commercial operations (auto work, etc.) to enter in terms of rates and put this offer in competition with all the credit institutions through a comparator like Lite Lender. You will have a good visibility on what you can borrow and under what conditions and choose the best financing solution. ”
Loan insurance for consumer credit is optional. Included in your loan offer, you can refuse it. Note that consumer credit insurance rates are relatively low. If you wish to insure yourself against the risks of life (death or disability), we advise you to take out one.
In summary, to choose your financing wisely: compare the credit rate, the insurance rate and the administration fees.
Find your consumer loan at the best rate, it’s easy and free!