Consumer credit: features and procedures

A consumer credit is a loan granted by a bank or merchant to finance the purchase of an everyday consumer good or service. How much can you borrow? How do I get the best rate? Find out all you need to know about the features and procedures involved.

The main features of consumer credit

Consumer credit is frequently used by households to purchase consumer goods or obtain cash. Amounts range from 200 to 75,000 euros, repayable over a period of more than 3 months.

Repayment is made in instalments. Each month, a portion of the borrowed capital plus interest must be repaid to the lender. The consumer credit rate is expressed in terms of the annual percentage rate of charge (APR), within a limit set quarterly by the French government. This limit, known as the usury rate, corresponds to the maximum legal amount that institutions are authorized to charge when granting credit.

There are several types of consumer credit:

  • Earmarked credit: the funds granted can only be used to purchase a specific good mentioned in the contract, such as a vehicle. If the loan is refused, the purchase is cancelled.
  • Unrestricted credit: the sum granted can be used freely by the borrower. This means the borrower can finance all types of goods and services, or free up cash for other uses.
  • Revolving credit: this type of credit provides the borrower with a freely usable reserve of money. As soon as the borrowed sums are repaid, the initial reserve is replenished up to a predetermined ceiling.
  • Lease with option to purchase (LOA): often used to finance the purchase of a vehicle, the LOA allows the borrower to dispose of an asset in return for the payment of monthly instalments or lease payments. With this solution, the borrower has the option of purchasing the asset at the end of the contract.

So it's a good idea to study the features of consumer credit carefully before taking the plunge.

How to take out a consumer loan

Many banks and credit institutions offer borrowers an online simulator to help them estimate their future monthly payments and the cost of credit.

Once you have completed this 100% free, no-obligation simulation, you can submit a quick application by attaching the necessary supporting documents:

  • proof of identity,
  • bank details (RIB),
  • photocopy of last 3 pay slips,
  • proof of address less than 3 months old.

Additional documents may be required when taking out an affected loan (photocopy of the vehicle registration document for a motorcycle loan, photocopy of quotations or order forms for a works loan).

To take advantage of a consumer credit offer at the best rate, we strongly advise you to play the competition by using an online comparator or an experienced broker.