How Does a Personal Loan Work and Who is Eligible?
You can apply for a personal loan online on the lender’s website, by phone, or directly at a branch. If the lender provides a preliminary positive response, the borrower receives a credit contract which they must sign along with the broker.
The file will then be returned with all the required documents, including a copy of the identity card, a bank account statement, a proof of income, etc. From the signing of the credit contract, the borrower has a two-week withdrawal period.
Be cautious, before making a personal loan application, you must be sure you can repay it.
Indeed, borrowing money costs money. This results in monthly payments with an interest rate that must be manageable, otherwise, problems could arise.
Before any application, you should therefore check your repayment capacity based on your income and any existing loans.
Anyone can apply for a loan. It is the bank or the lending institution that decides whether or not the loan is granted. The acceptance of the loan mainly depends on the borrower’s income and thus their repayment capacity.
Personal Loan Amount and Rate
The amount of a personal loan can range from 5,000 to 100,000 euros. The amount borrowed by the consumer is defined by the lending institution based on the borrower’s needs and repayment capacity.
A personal loan is also subject to constraints related to the repayment duration, generally ranging from 12 to 120 months.
Regarding the interest rate, it is fixed and depends on the duration and amount of the loan. The longer the repayment period of the personal loan, the higher the interest rate.
Conversely, if the borrower chooses to pay higher monthly installments over a shorter period, then their loan will be less expensive.
Note that the interest rate will also decrease based on the total amount of the loan. A personal loan of less than 10,000 euros is often offered at a higher rate than a larger loan.
