Every consumer asks himself this question when he decides to obtain a loan to finance a large purchase (maximum 75000 $). This question also arises to deal with an unforeseen expense. Contrary to what one might think, the answer is not as simple as it seems.
We will name here the rate of a credit: “APR” (Global Annual Effective Rate). This one includes:
- The nominal rate of credit;
- Application fee
- In certain cases, other compulsory fees (insurance for example).
In order to determine how to find the best possible rate for your project, you need to know the different types of consumer credit practiced and therefore the one that best suits your needs.
What are the different types of consumer credit?
- Personal credit: Who is not assigned to a particular need. It is not necessary to provide proof of the use of the funds.
- The assigned credit : As its name indicates it must be linked to a particular purchase. It has the advantage of being canceled automatically if the purpose of the financing is not delivered.
- Revolving credit: Called in the past “revolving credit”, it is a reserve of money or a permanent credit.
- LOA (Lease with Purchase Option): Also known as leasing or leasing, this mainly concerns vehicles. Its particularity is that the praetor organization owns the property until the user decides whether or not to “lift” the call option.
What is the difference between the rates of each credit?
The rates applied to these different types of credits vary according to several data.
For all types of credit, we must take into account the current financial situation and therefore at what rate the lending institutions themselves borrow money.
Risk calculation: for example, banks and other lending institutions consider that a client wishing to finance a new car presents less risk of default than a customer wishing to finance a long journey …
There are also commercial offers of the moment especially with regard to the credits allocated. For example, you’ll see interesting car loan deals popping up during the World Car Show, or special wedding offers often before the summer and during the various wedding fairs. There are many examples (travel, renovation, DIY).
For revolving credit, although it may be very practical because it is flexible in use, interest rates are generally very high (sometimes up to 20%).
LOAs generally include a multitude of vehicle maintenance services, and the total financial cost is usually higher than conventional credit. These are most often addressed to professionals.
It is also important to take into account the credit repayment period. In general, the most advantageous rates are for shorter repayment periods.
In conclusion, what are the best rates for a consumer credit?
- To find the best rates, it is better:
- To take advantage of commercial offers and their seasonality.
- To opt for an assigned credit.
- To favor a refund on a shortest possible period according to your budget.
- To subscribe directly online it often allows to find more advantageous rates.
- To compare a maximum of offers.
- For large sums, wait for a favorable financial situation.