The consumer credit allows individuals to have a sum of money loaned by a specialized institution to finance a purchase of goods or consumer services such as the purchase of a new vehicle. In order to obtain these funds, consumers can turn to different actors.
Historically, in order to obtain a loan, the borrower had to get closer to his usual bank (or to solicit a bank). During a physical interview with a bank advisor, he had the opportunity to ask for a sum of money to finance a project. The mission of the specialized advisor was to support his client in his approach and to direct him towards a solution adapted to his needs. He then had to position himself at the request of the borrower and make him an offer containing the amount borrowed, the duration and monthly repayment. The borrower was not free to decide how much he could borrow or the monthly payments he wanted. The advisor determined based on the client’s income and expenses (debt ratio) and then made a proposal. This process was sometimes long and difficult. If the borrower wanted to have several offers to compare and choose the best, he had to go to different banks to make different requests. The process could take several days or even weeks. Moreover, the bank’s response was only very rarely instantaneous. A delay of several days between the request and the offer was frequent.
In recent years, with the development of the Internet, multiple banking institutions have settled and developed on canvas.
Offer consumer credit solutions to individuals
This development was made possible by the ease of use of the different interfaces. It is now possible for a consumer to apply for credit from home (or elsewhere) at any time and on any day. In addition, before any request, it can perform different simulations before making any decision. Many websites offer very easy-to-use simulators that allow the borrower to simulate any request. At first, he will have to inform the purpose of his financing (car purchase, loan work, marriage, personal project, etc.), then the amount and finally the monthly payments (or duration) desired. Once these various elements are filled in, he will obtain a result indicating the cost of his loan with the APR applied (annual percentage rate corresponding to the applied interest rate as well as the various costs decided by the praetor). This information will be available on all the results of the various sites offering payment solutions.
The borrower is free to make different simulations with the number of institutions he wants
These simulations do not engage him in any way, so he can simulate as many times as he wants for current or even future projects. He is free to adjust the amount borrowed or even the amount of monthly payments. These simulators will allow him to learn about the different rates applied according to the different situations and amounts borrowed. Thus, he will find that the longer the repayment period, the higher the rate applied. Similarly, the more uncertain the project (loan work), the higher the rate will be. The borrower is autonomous. He can then compare the different results and thus make his or her requests to the organization offering the best offer.
If he wishes, the borrower can seek advice from online professionals
All credit organizations have set up telephone lines to be available to their customers and support them in their approach and answer all their questions. Frequently asked questions are also available on the different sites. This space contains all the most common questions such as “what is the deadline for obtaining funds? “Or” Is it possible to anticipate the repayment of my monthly payments? “. These sites are very educational and answer globally any questions that the borrower might have.
By making his various requests on the Internet
The borrower saves time insofar as he does not have to go to the various points of sale to make several files. He is not constrained to the different opening hours of the establishments. On the Internet he can even go to specialized “comparator” sites to save even more time and enter only once the essential data to his request (amount, duration and monthly payments). The “comparator” site will indicate to him the best available rate for its financing and will direct it towards the commercial site of the establishment so that it can make its request.
The borrower also saves time when applying online because the answer is usually much faster than the answers provided by the banks. An answer in principle is provided on the Internet at the end of the entry of all personal information of the borrower (family situation, professional, financial, etc.). Following the complete submission of the file, a definitive answer is provided on average in 48h. The speed of processing demand is often a significant advantage for many households who need to obtain credit quickly.
Households no longer hesitate to apply on the Internet for low consumption credits. It will also be much easier to get a positive answer on an online application than on a request made in a physical bank.
Banks are still solicited
Especially for large amounts of money borrowed. Indeed, it is important to be accompanied by a professional when it comes to borrow a large sum. The professional will be able to advise and guide the individual according to his needs and personalize his different monthly repayments so that he does not find himself in a delicate situation. Banks are less flexible but more rigorous. From a certain amount, it is important to have a stricter control to avoid over-indebtedness of households. It should be noted that since 1990, the number of over-indebtedness files filed by French households has increased by 140%. On these over-indebted households, the debt reaches an average of € 41,254 (mortgage included). Currently, when a consumer credit is subscribed, no means is put in place to verify that the borrower has no other credit debt. The latter is considered in good faith by the banking institutions. There are no common files containing all the credits subscribed by households. Dealing with a natural person could have the effect of reducing misrepresentation. On the Internet, it is much easier to get around the truth or to lie by omission (deliberate or not). Although the sending of supporting documents is mandatory, the controls by these bodies are less thorough. It is very easy to obtain a consumer credit for a small amount or even to benefit from “payment in 3x” payment facilities.
These are often offered by merchant sites of consumer goods
Often the ease of payment entails no cost but it is not uncommon for these sites to offer deferred or multiple payments but with a remunerative rate. For these financings, there is almost no control. The borrower is therefore free to multiply them and to go into debt as and when his purchases without realizing it.
When the borrower applies for credit on the Internet
It is very important that he or she learns a minimum about his / her commitments and the financial risks to which he / she is exposed. The different websites have the obligation to remember that any credit commits the borrower to repay, regardless of the amount and duration of the credit. Even for small amounts, the borrower agrees with the institution to reimburse them regardless of their future financial situation (job loss, disability, death, etc.). Various sites also offer advice cards informing consumers of the different products but also their right to borrow. Government sites also warn about the practices of these organizations. For example, it is not uncommon for them to offer revolving credit first as a financial solution. However, they normally have the obligation to offer the personal loan first. This practice is common since the revolving credit is much more profitable for the lender (high interest rates applied). As a result, revolving credit is put forward on merchant sites by means that appeal to the consumer (large print, flashy colors, boxes, etc.).
The borrower must know the legislation so as not to fall victim to these practices
He must be able to benefit from the best solution, personalized and adapted to his situation. Advantages and disadvantages are present regardless of the chosen professional (banks or Internet), the borrower must choose the situation that suits him the best and most secure according to his situation. top