How does the works loan work?
The works loan is a consumer credit. It is governed by the Consumer Code. It is a loan whose repayment is spread over time. Each month, the borrower repays a monthly payment according to the rate of works credit applied by the lending institution.
There are several types of consumer credit depending on the use that the borrower wishes to make of his loan. Restricted credit, personal loan (loan for works) and revolving credit.
Since the introduction of the Lagarde law (2010), the amount of a works credit has been between 200 USD and limited to 75,000 USD (previously 21,500 $) over a minimum repayment period of 3 months. If you need a financing envelope of more than 75,000 USD, it will be necessary to apply for a mortgage according to your project.
The personal works loan
The classic work loan is a personal work loan that the borrower can use as they see fit. Indeed, it can be used to finance leisure activities, work, the purchase of a car, or household electrical goods, without the borrower having to justify its use.
The work credit rates and fees associated with this loan vary from one lender to another. It is therefore necessary to take advantage of the competition to obtain the best rate. The credit rate applied depends on the duration of the works credit and the amount borrowed. The bank makes the money available at one time. The borrower must then repay the personal work loan each month according to the amortization schedule put in place.
Affected credit is linked to the good or service
Although assigned credit is often used for car credit, it is also possible to take out assigned credit for your work. This is directly linked to the property, for example, the purchase of a vehicle or equipment. The amount issued by this type of works loan can only be used for this specific project. If the contract is not fulfilled, the credit allocated is automatically canceled.
Revolving credit: a reserve of money available
Revolving credit is different from personal loan and restricted credit. Indeed, its principle is based on the availability of a sum of money which the beneficiary can freely dispose of. It is also known as permanent credit or revolving credit. The amount borrowed cannot exceed the maximum amount provided.
The unlockable money reserve is replenished as the borrower repays it. Interest is then deducted only from the amount borrowed unlike other loans. Some bank cards offer this type of service with the option to pay on credit. It is therefore a reserve of money available according to the needs of the borrower.