Do you want to finance a personal project with a loan? Do you want to take out a loan? This article summarizes in 5 points what you must absolutely consider.
When you have a project and want to make a loan to finance it, it is very important to first assess your borrowing capacity. That is to say, your ability to repay it without difficulty, even in the event of unforeseen circumstances.
For this, you can start from a simple calculation. It consists of adding your monthly income and subtracting your monthly expenses, including the amount of the refund of the new credit you wish to contract.
Monthly income – monthly expenses * = rest to live
* including the repayment of the new credit.
Then you have to compare the result of this subtraction so-called “rest to live” with the sum of your monthly income. Generally, it is considered that the remaining living must be at least 30% of monthly income for a single person and 50% for a couple.
Nevertheless, this is a minimum. Therefore, it is always better to provide more room for these ceilings. This margin will allow you to face any unforeseen events. Note that this rule can be taken into account as long as your monthly income is at least 1250 euros.
This calculation will also allow you to estimate the ideal duration for your credit. Indeed, extending its duration will allow you to reduce the monthly repayment so that it fits your budget. Attention, however, that maximum periods are fixed by the regulation according to the amount borrowed.
There are many credit offers, so it’s important to compare and evaluate the offer that’s right for you.
To compare, always leave the APR (annual percentage rate). This is an “all inclusive” rate that allows you to effectively compare all offers of personal credit, regardless of their formula.
Although the regulations strictly and precisely regulate consumer credit, it is absolutely necessary to read the general terms and conditions of the contract. These must be provided to you through the credit intermediary or the lender.
They will allow you to understand the conditions before making a credit.
You will discover, for example:
When you receive a credit offer, it is important to compare all the elements of the proposal that is made to you. Beyond the lending rate, look at the APR (annual percentage rate of charge). As mentioned above it is the all inclusive rate. He therefore takes all the costs of your loan application.
For example, having to pay a fee is not necessarily negative. Indeed, if you have two loan offers with the same APR, you will finally pay the same for your credit, whether it includes or not a fee.
Stopping only on the rate could also prevent you from seeing other benefits offered by some lenders. For example, Harlequin offers a reward to all borrowers who have correctly repaid their loan over its entire life. This consists of a sum of money equivalent to a portion of the cost of credit, paid to the borrower at the end of the loan.
Also beware of scams! An authorized lender can never ask you to pay fees before the loan is granted, for example to analyze your file.
If you already have credits in progress, it may be interesting, as part of a new credit application, to study the possibility of consolidating all of your credits.
A pool of credits is to gather 2 or more credits in one.
A credit consolidation can allow you either to obtain better rate conditions on the new loan pooling existing ones, or to modify the conditions of your existing credits.
For example, you have two credits over 36 months. You want to make a new loan and consolidate the whole with a repayment of a longer duration. The final cost will be higher, but the proportional reduction in the monthly payment obtained through consolidation will allow you to manage your monthly budget more easily.
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