Also called depreciable credit, installment credit is easily accessible credit. It is mainly used to pay unforeseen expenses so as not to be forced to use its reserve of money. We will give you the details regarding the operation and benefits of this type of credit.
Definition of installment loan
This is a consumer loan without proof which is generally requested to finance a specific project: home renovation, car purchase, travel payment, etc. Its side without proof makes it particularly attractive for consumers who do not need to provide an invoice or quote for their project in the credit application.
How the installment loan works
Installment credit is a credit agreement in which a financing institution grants capital to a borrower without knowing how he intends to spend his money. It is a credit to be reimbursed over a fixed period with fixed payment terms (generally monthly). Most amortizable loan contracts mention (s):
- monthly payments
- credit repayment period (this depends on the capital borrowed but it is 12 months minimum)
- total cost of credit
- interest rate…
As with any other credit, installment credit is obtained by demonstrating to the lending institution its repayment capacity. To verify this, the latter performs an in-depth analysis of the applicant’s resources and expenses. Note that installment credit is regulated in book VII of the Code of economic law which deals with consumer credit.
Benefits of Depreciable Credit
The main advantage of this type of credit is the free use of funds. The fixed nature of the repayment period, the interest rate and the amounts of monthly payments to be paid is also an asset of the depreciable credit. Indeed, with these fixed payment conditions, the borrower knows in advance the cost of his credit and the amount of repayments to be made each month. On the other hand, the rather long repayment duration of this type of loan induces a reduced amount of monthly payments which the borrower can settle without much difficulty.
On the other hand, the beneficiary of the installment loan must take into account the fact that it is impossible for him to change the terms of repayment of his credit, once the contract has been signed.
Obtaining an installment loan
To qualify for a low rate installment loan, you must start by comparing the offers available on the market. When comparing, pay attention to the repayment tenure, the amount of the monthly payments, the interest rate, the ancillary costs and the APR. At the same time, do a credit simulation to get an idea of the total cost of your loan.