When you need a personal loan, unlocking a sum to constitute a personal contribution is not always easy. To avoid this problem, lending institutions offer their customers to borrow without contribution. What are the advantages and limits of this formula? How to obtain a loan without contribution? In which cases is a personal contribution necessary?
Is it still possible to borrow without contribution?
Lending institutions grant loans without requiring any personal contribution. Their clients are looking for simple, quick and transparent ways to get a loan. Lending without contribution meets this expectation. This is especially true when the amounts involved are small. But even for the most important projects (car credit, carrying out work, personal loans, etc.), it is still possible to borrow without contribution.
The main thing is to demonstrate its ability to honor its commitments and meet the conditions set by the credit organization.
How to obtain a credit without personal contribution?
Before granting a loan without personal contribution, the lending institutions examine the financial situation of the borrower. The numerous conditions to be fulfilled can be classified into 3 categories:
- a stable professional situation, which ensures regular income over time. Concretely, this very often involves a work contract with a permanent contract, with a seniority of several years to reinforce the solidity of the file;
- a comfortable living space, which allows a sufficient level of current expenses. By deducting the due dates from the amount of income, the establishment of credits calculates a remainder to live. This must be sufficient to maintain a satisfactory standard of living after obtaining the loan without contribution;
- a flawless financial history, which reassures the ability to keep its commitments. Flawless repayments of old credits, and good management of your accounts in the past give confidence and increase the chances of obtaining a loan without personal contribution.
How to get better credit terms?
Unlike mortgage loans, personal contribution is rarely compulsory to obtain a personal loan. But advancing this amount not borrowed at the start of a project strengthens its financial strength. The contribution remains an effective means of showing commitment and of concretely starting the realization of the project. It is also a means of obtaining significant advantages in the assembly of a financing dossier:
- shortened credit duration;
- more competitive interest rates;
- other advantageous financial conditions (deferred reimbursement, etc.).
With a personal contribution, there is more room for maneuver to negotiate more competitive credit conditions.
Reduce the cost of financing
Making a personal contribution can reduce the repayment tenure or the amount of the monthly payments, since the amount borrowed is less important.
Example: financing the purchase of a car for $ 10,000.
- without contribution, over 3 years and at a rate of 5%, the monthly payment excluding insurance is $ 300;
- with a contribution of $ 2,000, the monthly payment excluding insurance is only $ 240;
- with this same contribution of $ 2,000 and by maintaining the monthly payment at $ 300, it is possible to reduce the loan period from 36 to 30 months.
In the end, the cost of financing the project is reduced thanks to the personal contribution.