The Laws That Protect The Personal Loan

The personal loan is a credit agreement taken out by a person from a banking institution with or without contribution . It allows any individual who needs money to carry out projects or solve an urgent financial problem to benefit from a sum of money that can help him meet his needs with credit institutions such as banks, banks Credit Mutuals, Caisses d’Epargne …

Given the vulnerability of the borrower to the voracious appetite of financial institutions in search of permanent gain, the legislator has put in place laws, real safeguards to protect the consumer.

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Whether it’s called Scrivener, Neiertz, SRU, Lagarde, Hamon, etc., they all work to compel personal loan organizations to play a role in transparency by providing credible information about their offers. Here is a summary of these legal provisions to guarantee you more secure and responsible personal loans.

The Lagarde law

Implemented between September 2010 and April 2011, the Lagarde law, still called consumer credit reform law and the fight against over-indebtedness is mainly devoted to strengthening the protection of borrowers.

Its flagship provision is one that requires information about advertisements and contracts to be more complete and legible. This obligation is embodied in a box on the heading of any contract in which essential information on the offer is mentioned, such as the type of credit, the total amount of the loan and the conditions under which the funds are held. will be made available to the client, the duration of the contract, the amount and periodicity of the due dates to be paid by the borrower, the borrowing rate, the costs related to the execution of the contract, ect.

The other very important measure of the Lagarde Act is the retraction period that since the implementation of this law has gone from 7 to 14 days after the subscription of a credit. The retraction period being the period available to the borrower to think, it gives the consumer the power to waive the contract.

However, the Lagarde law recognizes that financial institutions have the possibility of very in-depth analyzes of the status of the borrower, a source of guarantees. Likewise, it stipulates that the applicant’s indebtedness must in no case exceed 33% of his income.

The Neiertz law

Entered into force in December 1989, the Neiertz law is also concerned with protecting the borrower by ruling on the over-indebtedness. It creates the over-indebtedness commissions and the National Individual Credit Repayment Incident File (FICP).

These over-indebtedness commissions survived the repeal of the Neiertz law, which occurred in 2000. Present throughout France, these over-indebtedness commissions have the role of advising individuals to reschedule their debts in the event of over-indebtedness.

As for the National Register of Personal Credit Repayment Incidents (FICP), it is also managed by the Banque de France and includes payment incidents relating to personal loans and the provisions of the over-indebtedness commissions. Credit institutions are advised to consult the FICP before any loan.

The Scrivener Law

Promulgated in 1979, the provisions of the Scrivener law can be summed up in three points: the prior offer of credit, the cooling-off period and the suspensive clauses.
In advance of any personal loan, the advance credit offer is drawn up by the credit institution and is sent to the loan applicant and any bonds. It must include certain mentions such as the identity of the parties, the nature of the loan, the purpose of the loan …

The MURCEF law

It obliges credit institutions to appeal to the mediator in the event of litigation.