The different types of consumer credit

Consumer credit is a simple way to finance many projects like a wedding or buying a car. For this there are different types of consumer credit, whose conditions adapt according to their use.

The personal loan

The personal loan

The personal loan allows the purchase of goods without proof. Thus the borrower spends the amount borrowed as he sees fit to finance the projects of his choice. Personal credit can be used to balance the cash flow, but also for various purchases (furniture, vehicle), work or travel. The duration and the loan amount are initially defined, they are not adjustable later. This allows the borrower to know in advance how much he will repay each month and when his loan will end.

The appropriated appropriation

The appropriated appropriation

Unlike the personal loan, the credit allocated is for a specific purchase. The borrower must explain and justify his purchase (cars, appliances, furniture). The sum borrowed must then be spent exclusively for the acquisition of this property. If the sale is not made, the credit is canceled.

The revolving credit

The revolving credit

Revolving credit, also known as revolving credit, is not intended for the purchase of a particular property. It is made to finance daily expenses. The borrower uses the part of the credit that he wants, he is not obliged to use all the money. Interest is then deducted only on the amount used. If the terms of the revolving credit are more flexible, in return the rate is variable.

Lease with purchase option (LOA)

Lease with purchase option (LOA)

The LOA is particularly used for the purchase of a new car. The borrower leases to the lending agency the vehicle for a given period of time by paying monthly installments. On the date defined by the contract, the borrower can choose to buy the property at the price previously fixed, or to return it to the lessor.

Free credit

Free credit

As its name suggests, free credit induces a zero interest rate for the borrower. The sum borrowed is therefore equal to the sum reimbursed. It falls within the scope of consumer credit if the repayment period exceeds 3 months.

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