The all-purpose loan, also known as a term loan or consumer credit, is a loan without a specific purpose. In fact, it can be used for any purchase of your choice, unlike a home improvement loan or car loan. More flexible than other types of credit, it offers numerous advantages and can be the right solution to help you recover when facing difficulties with certain expenses. Banks and other credit institutions agree that it is a flexible credit option. Indeed, obtaining it can be very fast. However, the amount granted is typically lower than that of other loans.
Everything You Need to Know About the All-Purpose Loan
A Loan with No Specific Purpose
This type of loan is available to individuals, entrepreneurs, and self-employed professionals. Even if the borrower knows what they plan to do with the obtained funds, they are free to change their mind. There’s no obligation regarding its use. Thus, the funds can be used for various projects: financing a wedding, paying bills, purchasing furniture, a trip, or even aiding a friend in need.
The Advantages of an All-Purpose Loan
When you apply for a consumer credit, there is no requirement to provide proof of how the loan will be used. You’re free to use it as you wish. However, the benefits of an all-purpose loan don’t end there. The borrower enjoys faster processing of their application, and generally, they also benefit from a fixed repayment rate with unchanged monthly installments throughout the loan term. Additionally, the allocated funds are quickly transferred to the borrower’s bank account. Most credit institutions provide a response within 48 hours after receiving the application.
Are There Any Risks in Taking Out Such a Loan?
In Belgium, the law regarding this matter is very strict. It imposes several procedures on banks or credit institutions that grant loans, aiming to protect the applicant, especially those who are blacklisted or unemployed. It’s important to note that a loan must, of course, be repaid, and it also costs money. The main question is whether the borrower can repay the monthly installments without harming their financial situation. Moreover, consumers should be informed of their right to withdraw, which is 14 days after signing the loan agreement. This gives them time to reassess their repayment capacity or learn about their rights and obligations.
What Documents Are Needed to Set Up a File?
The required documents for obtaining an all-purpose loan depend on your situation. Here are the documents that will definitely be requested, but be aware that additional documents might be needed for special cases to assess your needs.
- Identity card
- Bank account statement of the borrower’s current account
- The last 3 pay slips or any other proof of income: family allowances, unemployment benefits, alimony, and so on.
- If other credits are ongoing, their contracts will need to be included.
- For self-employed individuals, the most recent tax assessment notice and their business number should be included.
