When you are short of cash and have a project or an urgent need for money, the personal loan becomes obvious. But which loan to choose and what should be taken into account? Here are some tips to help you choose the right loan.
Why choose a personal loan?
If no one around us can grant us a zero-rate loan, and we absolutely need this money in a fairly short time, we must turn to the banks.
A personal loan and a sum of money entrusted by the bank to an individual against its reimbursement within a given period, increased by a small jackpot calculated according to a certain rate. This loan is not reconstitutable, it is not a revolving credit. You have to wait for the end of the repayment to reapply for the same loan. Depending on the debt ratio, several personal loans may be accepted. The banks inquire at the level of the FICP (File of Incidents of Credits to Individuals) and FCC (Central Check File) to ensure that they can trust the borrower.
The more you borrow a large sum that you repay quickly, the less the loan is expensive. Obviously, the longer the repayment period, the higher the costs, especially for small amounts borrowed. It is therefore preferable to adjust your loan to your needs. You will find examples of personal loan, work loan or others by entering the keywords on your search browser.
What kind of personal loan?
The credit, loan has a cost and the monthly payments must be honored without incident of payment, which would generate additional costs or even a formal notice to have to reimburse the totality of the sum remaining due.
The personal loan
It’s the most requested loan. It generally concerns small sums, from 1,500 to 15,000 €. This loan is requested to deal with certain unforeseen events or to have fun from time to time. The purchase of a washing machine, a car repair, an energy bill that is too high or take advantage of the sales to make a big purchase such as a bedroom or a living room.
Read also: How to quickly get a personal loan?
The work loan
The work loan commits a larger sum than the simple personal loan. It must be used to carry out these said works, often with supporting invoices. It is granted for a amount of up to €60,000 repayable over a maximum of 10 years.
The holiday loan, travel
It must be repaid in up to 12 months if you want to take advantage of a holiday at a low price every year. Between 1500 and 7000 € depending on the holiday chosen. Again, the faster you repay, the less interest you pay.
The study loan
Often between €1,500 and €25,000, the student loan makes it possible to finance studies even without being a scholarship holder. The monthly payment to be reimbursed is low enough for the parents to pay for it. It includes study costs as well as rent for at least the first year. This loan allows time to turn around and find a slightly less expensive accommodation solution for the following year, such as a roommate.
How to choose a personal loan?
Several choices are available to us:
Online or physical bank?
You have to compare fees, do simulations on several sites, or go to physical banks. If you are a long-time customer and no incident has occurred on your accounts, you can have much easier access to a substantial personal loan. The debt ratio can be studied in a more flexible way compared to a banking establishment in which one is unknown. Rates and fees can quadruple from one institution to another, you have to take everything into account, the amount, the rate, the duration, other bank charges.
The amount requested must be proportional to the ability to repay. Depending on the amount you need, you can of course count more just in case. But it is necessary to calculate the monthly payment, that it can easily pass in the budget.
It is often here that the shoe pinches. The rate indicated is the one used for the calculation of interest over a year, the sums constituting this interest are added up from year to year, on the amount remaining due. But if we calculate the final percentage using the proportionality table, we see that a loan of €60,000 at an interest rate of 2.55% gives a total of €7,941 in interest and therefore 13.23% interest at the end ((7941 x 100): 60,000). So calculate the final rate versus the repayment time to see which is the best for you. It’s a bit like calculating the products in store, is it better to buy retail or in batches…we are sometimes surprised at the calculation.
This element, as said previously, depends on the calculation of the final rate and the possibility of monthly repayment.
On the same subject :
- How to negotiate the best home loan?