Personal input is essential to facilitate and obtain certain benefits when applying for a bank loan . We will see what the principles are, how to be able to constitute a personal contribution and what are the advantages.
The personal loan is intended to compensate for a lack of financial means for different personal project such as the purchase of a car, the completion of some work of the house, pay some fees … this loan does not require any proof.
Principle and advantages of the personal contribution
The personal contribution is the amount of money that the borrower is able to provide in addition to his loan for his project. It is usually expressed as a percentage of the project amount.
The personal contribution can come either from the savings of the borrower (savings for example), of an inheritance or of a donation. There are also other methods to build this contribution, such as the release of the said participation by the employer.
This is an assistance the employer can provide to an employee who wishes to purchase his principal residence. It is also possible to subscribe to specific loans such as zero interest loans, CAF loans, local loans …
Normally no specific minimum amount for this contribution has been established. However, we note that the banking institutions require a minimum contribution of 10% of the amount of the purchase. Indeed, the latter improve borrowing conditions when the amount of the contribution is high.
A contribution of 20 to 30% is preferable to enjoy certain benefits. The personal contribution is a way for the bank to reassure itself about the ability of the borrower to repay.
Thus, the bank or the lending service between individuals will be able to accept the loan as soon as possible and offer the lowest rates. It is however recommended not to invest all its savings in this contribution in order to face possible expenses during the project.
Principle, advantages and disadvantages of the personal loan
The personal loan is the most subscribed loan in France and is part of the consumer credit category. It is therefore a depreciable and conventional credit. The loan is paid at once to the borrower’s account. As said before, it does not require any explanation because it can be used for different purposes.
This type of loan is repayable in the short term, that is, from a few months to a maximum of five years. However, his monthly payments are fixed and predefined. Generally, the personal loan will not exceed 21,500 euros and its amortization period, not less than 3 months.
Indeed, these conditions will guarantee consumer protection. However, it depends on the bank, which will deem you to grant you a higher loan with a custom contract. The bank will still be able to define this amount according to your debt.
There are two types of personal loans, variable rate and fixed rate. However, it is possible to change the variable rate loan for a fixed rate loan at any time, at no cost.
The main advantage of a personal loan is its interest rate, which is more attractive than a loan for a purchase or a revolving loan. In addition, for this type of loan, it is easier to take out insurance and negotiate fees.
The loan is mostly used for unforeseen expenses. In connection with the non-allocation of the personal loan, in case of deterioration of the property or non-delivery, the borrower will be obliged to continue its repayment.