Do you want to know in detail the duties that fall upon you (without forgetting your rights) when applying for a credit? More information in this article.
What rights and obligations are hidden behind a credit?
When applying for a credit, the lender and the borrower must adhere to certain rules. Indeed, the granting of a credit is subject to mandatory conditions set by law, and they must be respected by both parties. To protect the consumer, different measures and recourses are in place when signing for any type of credit, whether it is a personal loan, leasing, or other credit options like a credit consolidation.
What are the lender’s duties and prerogatives?
What imperatives must the lender adhere to?
Before signing any credit contract, the lender (or the credit intermediary if applicable) must check the solvency of the borrower. To do this, they will submit a questionnaire and inquire about the borrower’s professional, family, and financial situation through questions as precise and numerous as: what is your job? what is your salary? what type of contract do you have? do you have additional income and what kind? are you a homeowner or a renter? are you married, single, divorced? how many dependents do you have? how many people live in your household? etc.
The lender’s interests
The objectives of the lender through this information are multiple. The first aim is to determine the borrower’s motivations and project. The second is to verify if the loan repayment conditions are met and feasible. Finally, the lender also plays an advisory role to propose the most suitable loan for the borrower’s situation: consumer loan, credit consolidation, personal loan, bridge loan, credit line, etc. Based on this data, they will create your file to either approve or deny the loan request. Besides the interview, the lender will also inquire with other financial institutions, including the Central Individual Credit Register, to verify the borrower’s claims as well as various information. They can determine if the applicant has previously taken a personal or other type of loan with another institution, if they are classified as a poor payer or not, the rates of their debt consolidation, etc.
The legal limits of the questionnaire to which the lender must comply
Some questions may seem very intrusive, yet they are necessary for the financial institution to make a decision. Only the necessary information is requested. The lender does not have the right to delve deeper into the borrower’s private life. Questions of a religious, sexual, political, ethnic, or philosophical nature are not permissible.
The borrower’s rights and duties
The veracity of the information to be provided during the interview
The borrower is obliged to provide accurate answers to the lender. Revelations and details that may affect the loan must also be disclosed. For instance, if the borrower agrees that they are employed but fails to mention that their employer has initiated a layoff process, this places the borrower in a false position.
The borrower’s prerogatives
Before signing any credit document, be it a personal loan, consumer credit, credit consolidation, etc., the financial institution must provide the applicant with the “SECCI”. This is a document presenting different credit formulas. The lender must also explain them so the applicant can make an informed decision. The applicant should be explicitly informed of the amount, duration, periodicity of the repayment, the consequences of non-repayment, and the relevance of the chosen credit. Finally, it is not mandatory to sign the document immediately. A reflection period is recommended.
