A loan, or credit, is a budget advance granted by a bank or financial institution for the financing of a project. The sum borrowed, plus interest, must be repaid in full by the deadlines set by both parties. All of these elements are listed in the said loan agreement. It is quite possible for you to perform a credit simulation on Good Credit to get an overview. austerlitz2005.com fleshes this out
What are the types of loans?
Depending on the reason for the loan, it is important to separate two types of credit. If the amount is paid directly to the borrower’s account and he can dispose of it at his convenience without having to justify his expenses, it is a personal loan . On the other hand, if the sum is allocated to a specific project, such as the purchase of a car, the loan is said to be affected .
A personal loan , also known as an installment loan or all purpose loan, is a consumer loan with fixed interest rates and fixed monthly payments specified in the contract. The applicant can borrow and use the sum received at his convenience without the need to justify it. This credit does not finance a defined purchase: it is therefore unassigned . The interest rate is generally higher for an unallocated personal loan than an assigned loan because the lender has no collateral. On the other hand, the sum is generally quickly available and the steps are few. But as for any loan, it requires to be able to justify income (pay sheets and bank statements) and prove that the amount borrowed can be reimbursed.
The organization of a wedding, a trip to Latin America, the purchase of a new television, the financing of studies of your children, … often require the borrowing of a certain amount. These are all examples of personal loans. If you want to make a comparison, you can go to this page and perform a credit simulation.
The study loan is a financial aid granted by the Communities to students and families who fail to finance studies in one go. This credit covers the various expenses related to the student life: the payment of the minerval, the purchase of the books, manuals and other material, the renting of a kot as well as the cost of the daily life. The student credit can be refunded in the following ways:
- immediate : the monthly repayment starts immediately;
- deferred : usually beginning 6 months after graduation.
In order to benefit from relatively low rates, it is important to estimate the amount of income and expenses to have a clear idea of monthly inflows and outflows, and to try to find a student job in order to borrow less or bring in proof of income.
Take an example: the cost of studying for 5 years (Master) in Belgium.
- The cost of a minerval is about 850 € per year. This represents nearly 4,250 € for 5 years .
- Books and textbooks are also to be taken into account and the cost associated with it varies between € 2,000 and € 3,500 for 5 years .
- The price of the accommodation will vary according to the type to choose, but it is possible to lodge for about 350 € / month. The lease period is usually one year. This amounts to € 21,000 over 5 years .
- The food is about 200 € / month, ie 12,000 € over 5 years.
- The price of transport varies greatly depending on the city and the means of transport. For example, a STIB subscription (for a student under 24 years old) in the capital costs 50 € / year ( 250 € for 5 years ).
- Student life (social, cultural, sports) also has a cost, estimated at around € 50 / month, ie € 3,000 for 5 years .
A wedding requires a large budget and it is not always possible to pay such a sum at once. A wedding loan is a great option to enjoy this amazing day. This credit can be used to cover the purchase of the dress, the rental of the reception room or to pay the caterer and the DJ. The repayment is spread over time and helps to put the pill of these considerable expenses.
Electronic devices loan
An electronic device loan allows, as the name suggests, to buy appliances, a new phone, a computer, a camera, … It is generally more interesting to turn to a banking institution to take such credit rather than the commercial sign, which acts as an intermediary and, therefore, takes a commission.
Redemption of credits
Also known as debt consolidation, refinancing or loan consolidation, the redemption of credits involves taking out a loan to repay all others: borrow money to pay back existing loans. The selected financial institution clears all outstanding credits and offers a single loan whereby all payments are combined into a single monthly payment, a single interest rate and a single repayment term. No more complex repayments of different loans.
On the side of benefits, monthly payments, interest rates and duration are specified in advance in the contract and refund management is very simple. On the other hand, it is sometimes difficult to obtain debt consolidation, the duration of the debt and the total amount to be paid are higher.