A loan is the preferred method of financing for both households and businesses. In France, a loan can be taken out with an online or traditional bank, an online credit platform or even an individual. What are the rules to know and the steps to follow in order to obtain the desired amount?
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| Bank loans for projects |
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| How to get bank loan? |
A bank loan, to finance what?
Borrowing via a bank loan
can have multiple purposes:
-
The realization of a project of real estate investment (purchase of a
housing with or without work, construction of housing);
-
Financing a business creation or takeover project;
-
The financing of an exceptional purchase (car, work, wedding, travel,
equipment, material);
-
The obtaining of a repurchase or regrouping of consumer/real estate
credits.
To note: what is a repurchase of loans?
Within the framework of a repurchase or regrouping of loans, the bank
merges several credits (real estate or consumption) in only one, at single
rate, by increasing the duration of refunding. The borrower then gains in purchasing power since his monthly payments
will be lower. If his financial situation allows it, this duration can also
be shortened so that the repayment of the credit is faster. A new capital
(or new cash flow) can also be integrated into the contract to finance a new
purchase or new project.
A credit is presented in many forms
to the private individuals (on the one hand the consumer loans, on the other hand the real estate loan) as to the companies (operating
credit, investment credit, leasing, term loan). The most common is obviously
the consumer loan, which is itself available in several formulas. There are,
for example:
-
The offer of a personal loan
contract (or unrestricted loan);
-
The offer of an affected loan contract (e.g. car loan) ;
-
Revolving credit
agreement offer;
-
The offer of a lease with purchase option.
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Where and how to take out a bank loan?
For an individual or a company, online or traditional banks are the main
means of applying for bank credit and getting their project completed.
However, due to their increasing reluctance to lend to both individuals and
businesses, as well as their delays in processing applications, more and
more consumers in France are choosing to turn to alternative solutions such
as online credit platforms. Rates are also often better online, as margins
are lower.
In all cases, the person wishing to borrow must include in his or her file a
financing plan presenting his or her project and the total amount or
additional cash required. An individual specifies the part of his income
that he can devote each month to the payment of the monthly credit, while a
company provides the balance sheets of the last years or the projected
accounts if it is about a creation of the company.
See more : Tricks to finance your project without the need to get a loan from
banks
What are the rules for bank loans?
The banks analyze the personal situation of the borrower before agreeing to
grant him a bank credit contract. The banks try to determine whether the
borrower's debt ratio is sustainable.
In the case of an individual
The monthly repayments of all the loans that the borrower has taken out
(including the one that is the subject of the application) must not exceed
the threshold of 33% of the stable monthly income of the household. The bank
can nevertheless retain a rate more important or on the contrary lower,
according to the remainder with living of the borrower.
In the case of a company
If the company has several employees, it is the company's net debt that is
analysed: it must be limited to 40% of equity.
In any case, other elements can play on the obtaining or not of bank
credits, such as :
-
The age of the borrower (which greatly influences the repayment period)
;
-
His professional situation (stability of income) ;
-
Family status (including spouse's income) ;
-
His health condition.
Note: maximum repayment period
For a consumer credit, the maximum duration is 72 months (84 at certain
banks). For a real estate loan, the bank can go up to 30 years, even a
little more.
In addition, some banks may require the borrower to provide an additional
guarantee. This guarantee can for example take the form of a guarantee or a
mortgage on a property owned. It is also common for insurance to be required
to protect the lender in the event of death, illness or disability
preventing repayment, or for the borrower to be required to make a personal
contribution in the case of a mortgage. In many cases, death and disability
insurance is the minimum cover required by the bank. It covers the risks of
death or disability of the borrower, but also of his spouse.
The banks determine themselves on a case by case basis the maximum capital
that it is possible to borrow, according to both the content of the file of
the borrower and the criteria fixed by the establishment. The only exception
is the consumer loan, for which the amount is capped by law at €75,000
(except in the case of a credit purchase agreement).
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Interest rates: how is consumer credit regulated in France on this point?
In the context of a consumer loan (this is also the case for home loans),
the APR or annual percentage rate of charge may not exceed the usury rate.
The usury rate is the interest rate above which banks are not allowed to
grant a loan. It is variable according to the borrowed capital. The annual
effective rate or interest rate, it, allows the borrower to gauge the total
cost of credit. Why is this? Because it takes into account all the interests
of this last (basic interests, but also expenses of insurance, expenses of
file...).
The interest rate of the consumer credits, that it is about personal loans,
of affected loans or still of bank credits dedicated to the company, cannot
currently exceed :
-
20,83 % for loans up to EUR 3 000 ;
-
10,16 % for loans above EUR 3 000 and up to EUR 6 000;
-
5.19% for loans over EUR 6 000.
These rates include insurance and all other charges.
How to choose a bank loan?
Personal loan or other, the borrower should not hesitate to put the banks in
competition in order to obtain the best possible loan formula, even to
resort to the services of a bank credit broker to benefit from the advice of
an expert in the field. The latter will take charge of your file from A to
Z. The regulation obliges the banks to present "pre-contractual information
sheets" for the consumer credits, specifying their specificities to allow
the customers to compare them more easily. These sheets indicate the annual
percentage rate of charge (APR). As a reminder, the APR includes the cost of
insurance.
Only the optional charges relating to payment flexibility (charges for
adjusting monthly payments upwards or downwards, deferral charges at the end
of the loan, early repayment charges) escape this rule as they are by nature
impossible to anticipate...
How does setting up a bank loan work?
Once the bank has been selected, an official application for a bank loan
must be submitted, bearing in mind that the institution is under no
obligation to grant a loan if the conditions are not met in terms of
solvency and repayment capacity.
If the loan is granted, the borrower has a cooling-off period of 15 days
with a consumer loan (30 days for real estate loans) to accept or not the
loan conditions set. If the borrower accepts the bank's loan offer, he or
she then has a cooling-off period of 14 days after signing the loan
agreement in the case of a consumer loan, as opposed to 10 days after
signing the preliminary sales agreement in the case of a property loan. This
is why the funds are usually paid out by the lender at the end of these
periods.
For a low-cost bank loan with a fixed APR and 100% online, choose
Younited Credit! After sending in your complete application, you will
receive a reply to your personal loan request within 24 hours. It's hard
to beat that.
What you should know about bank loans :
-
It can be used to finance many projects.
-
Online lending platforms are a good alternative to the bank.
- Thanks to these platforms, the processing time is shortened and the rates are often more interesting.
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