Is the lender free to set the debit rate and fees? Here’s the answer.
While the lender is free to set the interest rates and fees related to a loan or a credit consolidation, this can only be done to a certain extent.
Indeed, the setting of the rate and fees for a loan or a credit consolidation is limited by the maximum rates, which depend on the type of loan and the amount. These rates can be consulted on the Federal Public Service Economy website.
The Annual Percentage Rate of Charge or APR allows the total cost of credit for the consumer to be expressed. A percentage, obtained through a mathematical formula, expresses all fees, from application fees to administration fees, including insurance costs, as well as the interest to be paid for accessing the personal loan.
However, the APR does not account for fees that are not part of the credit cost, such as notary fees or late interest fees. Set in the contract, they equal the credit interest rate plus an extra percentage limited to a maximum of 10%.
How to ensure you get the best rate?
Comparing the rates offered by different lenders ensures that you get the best rate. Another way to enjoy, under certain conditions, interest-free or favorably conditioned consumer loans is to use the services of a social lender. They specialize in granting personal loans, among others, to people in precarious situations, with low incomes, or who are excluded from the banking system.
The website of the Federal Public Service Economy, SMEs, Middle Classes and Energy provides access to a list of social lenders.
Is the lender allowed to require guarantees?
It is within the lender’s rights to require guarantees. Indeed, a personal loan or a credit consolidation exposes them to certain risks of non-repayment. If the guarantee allows payment to the lender in case of defaults, its existence and nature may be presented. For example, as a guarantee or joint liability, and must be specified in the SECCI and the credit contract.
A guarantee may take various forms and can be provided by the consumer or a third party. In cases where the guarantee is an asset, the lender can sell it in the event of default to recover payment.
The guarantee as an engagement
The guarantee is considered an engagement and carries evident risks. There are certain protection measures. The first involves separating the guarantee contract from the credit contract. Also pertaining to credit consolidation, it emphasizes the responsibilities and the seriousness of the third party’s commitment.
The second relates to certain important mentions, including the duration of the credit contract, the guarantee amount, and the guarantee duration, which must be specified.
Where the personal loan duration is undefined, the guarantee duration cannot exceed 5 years. Regarding the interest amount to be paid, it should not exceed 50% of the principal amount. Moreover, the contract becomes null if the guarantee amount is manifestly disproportionate compared to the income and assets of the guarantor.
Deciding to release the third party who provided the guarantee for free falls under the jurisdiction of the commercial court in the case of bankruptcy, or the labor court for collective debt settlement cases, among others, to decide whether the release is granted to the person who provided their personal security for free.
