In France, it is not less than 1000 billion dollars which are contracted by the French in the form of credit. If a large majority of these billions of dollars are contracted around home loans, it is the consumer loan that is attracting more and more French people. With very attractive rates, the French no longer hesitate to go into debt to buy household appliances or cars. We talk about it in this credit blog article dedicated to consumer loans!
What exactly is a consumer loan?
In the different types of credit issued by banks or specialized organizations, consumer loans have a special status. Unlike a student loan or a home loan, a consumer loan does not require any particular proof to be released.
A consumer loan can be taken out to pay for a new car, to change your washing machine, to furnish your kitchen, in short, to finance all types of expensive purchases. They engage borrowers over a variable period of 1 to 7 years and revolve around 8,600 dollars on average.
Why such an attraction for the consumer loan?
In France, most borrowers subscribe to a consumer loan in order to finance purchases they could make by unlocking money on their passbook A. This is a very French exception and which indicates a certain love microcredit.
To quote some figures, recent surveys show that 62% of French people have already taken out a consumer loan when 33% of French people are still paying it back. A craze that is reflected even in the figures therefore and which demonstrates the great seductive asset of these consumer loans, surely attributable to the extremely low interest rates practiced in recent years.
Attractive interest rates for all French people!
Because yes, it is interest rates that explain the attractiveness of these consumer loans. Like home loans before them, consumer loans have paltry interest rates compared to those offered only a few years ago. It must be said that faced with the stagnation of the French economy, the banks have been ordered to issue loans at derisory interest rates to boost consumption. The mortgage loan rates stagnate around 1 to 2% and the consumer loan rates which usually peaked at 5% reach a maximum of 1% of interest rate in 2018. Derisive rates which explain the increase of 7, 4% of the number of loans in 2018 compared to 2017.
What Are the Dangers of Consumer Loans?
One of the major dangers associated with taking out consumer loans is of course the name repayment of these loans. Indeed, if the majority of credit granting bodies are serious, some associations deplore the dangers linked to consumer loans. They accuse credit organizations and banks of granting loans too easily and to anyone without really taking the time to check the borrowing capacity of individuals as well as their repayment capacity.
Some economists even fear the explosion of a bubble around these microloans, something that has already happened in the past and especially in the United States where people tend to live on credit all their lives.
Well, we hope you enjoyed this article on consumer loans. And you? Why would you be ready to take out a consumer loan? Do not hesitate to let us know, we would be delighted to survey our audience on this subject. See you soon for new articles on credit news in France!