The world of credit has undergone many changes in recent years. A lot of people or companies for the loan between individuals came with the needs and constraints of life. Consumer credit is a popular type of credit. Before thinking about applying for consumer credit, it is better to know it in all the details.
“Consumer credit” means any other type of credit which is not intended to finance a property purchase. Other personal projects such as a wedding, a change of furniture, the purchase of household appliances, the dream trip or even the purchase of a car are included in consumer credits.
A consumer credit involves two parties, including the consumer: a natural person; and the lender, who is a legal person (company, bank, establishment, company, agency, private organization, etc.). Both parties must imperatively conclude a credit agreement, in written form or on durable and conservable supports.
The interest rate
Consumer credit, like any other credit, is a paid service. The overall annual effective rates or APR is none other than the total cost or actual cost of consumer credits. All other costs incurred by the transaction, interest, commissions as well as miscellaneous remuneration and insurance premiums are included in the APR. Concretely, the TEAG is the amount of reimbursement of a consumer over a year of credit. The amount represents the amount of money that the borrower has to pay for the service obtained from a lender.
Since the TEAG is determined on the same calculation basis, consumers can make rate comparisons for many loan offers. Each credit institution or company offers different rates, while respecting certain limits, fixed according to the amount of a loan. It is by carrying out a credit simulation online that the future borrower can know which offer has the most advantageous rates for his situation.
What does the law on consumer credit in Belgium say?
Consumer credit is regulated by law. There are those that stipulate rules in favor of lenders and there are especially laws that protect consumers.
Sometimes many borrowers fail to meet their deadlines. And for good reason, they contracted many credits. Faced with this frequent incident, changes were made to the regulations related to the granting of consumer credit.
According to the rules, a consumer who still has more than $ 1,000 to pay does not obtain another credit from other creditors. Lenders also have the right to demand serious credit guarantees when a consumer applies for consumer credit. For this request, lending institutions or banks can request any information on the financial situation of a consumer who wishes to borrow. Legal lenders have the right to search for information on a candidate by consulting the files of the Central Credits to Individuals (CCP) of the Capital Lender. These cards contain the names of all the credit regulators who still have arrears. Each signed consumer credit contract is subject to a census with the CCP and the Capital Lender. However, any offer of credit cannot be presented to a consumer until after the latter has made a request without any external influence. All requests must be made in the form of a form to be completed by the consumer.
Conditions for obtaining
Some mandatory conditions are necessary for the formalization of the granting of a consumer credit. Filling out a form on the internet is something everyone can do. However, among the information, some are mandatory to be able to send a loan request online. Depending on the type of lender and the type of consumer credit requested, the conditions may be different. However, standard rules are maintained by all creditors. Here are some of the mandatory rules for obtaining consumer credit in Belgium:
- be of legal age (be over 18)
- be a Belgian resident (supporting residence certificate)
- have stable income
- Anyone who has neglected their reimbursements (monthly payments) for 3 months is considered as eliminated candidates.
Most often, the guarantee, the pledge and the guarantee of the credit makes it possible to optimize the chances at the time of a request for consumer credit. For more information or to know more details about a consumer loan offer, the practice of online credit simulation has become very common and effective. This tool also makes it possible to differentiate between multiple offers which all seem attractive on the market.
Maximum repayment period
Consumer credit can help in many cases. However, it is not without limits! The time allowed by law and by the lender to the consumer to settle his debts depends on the amount of money borrowed. This duration varies between 2 years and 20 years. The minimum amount is $ 5,000 and the maximum amount is $ 37,000. For example, the repayment duration for a loan ranging from $ 5,601 to $ 7,500 is 42 months.
Here is a small summary table:
|Credit amount||Repayment period|
|From $ 500 to $ 2,500||24 months|
|From $ 2,501 to $ 3,700||30 months|
|From $ 3,701 to $ 5,600||36 months|
|From $ 5,601 to $ 7,500||42 months|
|From $ 7,501 to $ 10,000||48 months|
|From $ 10,001 to $ 15,000||60 months|
|From $ 15,001 to $ 20,000||84 months|
|From $ 20,001 to $ 37,000||120 months|
|$ 37,000||240 months|
Whatever the duration or the amount, it is important for the borrower to ensure his creditworthiness. Making comparisons and asking for sound advice from a broker or a financial expert is always better than going blindfolded!
Early repayment and right of withdrawal
If you wish to repay debts before the deadlines stipulated in the consumer credit contract, there are a few rules. A credit contracted from December 1 st of the year of reimbursement can be canceled without charge during the legal withdrawal period. That is to say 14 days after signing the contract. After this date, repayment is subject to compensation, compensating the interest of the lender. For a remaining reimbursement period of more than 12 months, the indemnity is 1% of the amount of the total amount reimbursed. For maturities of less than 1 year, the compensation for early repayment is 0.5% of the capital.
Even when thought through, there can still be many reasons that push or force a borrower to reconsider their decision. It should not be possible to rectify a signed contract. However, with a consumer credit contract, a so-called “right of withdrawal” right exists for the consumer. After having signed a contract, if a consumer has changed his mind, he has the right to retrace his steps 14 calendar days after the date of signature of the contract.
For a carefully chosen loan, use a credit simulator or an online rate calculator and get reliable results in a few minutes! It’s free and without any commitment.