Concluding a credit contract is not a trivial act. Credafin informs and warns you through the following lines.
Key Points in a Credit Contract
A consumer credit contract, for all loan types and credit consolidation, is an essential document for both the lender and the consumer. It includes the evidence and terms of the agreement made, thus providing security for both parties.
- The consumer credit contract must contain the following information expressed clearly and comprehensively:
- The nature of the credit: personal loan, credit consolidation, installment loan, etc.
- Details concerning the identity of the consumer and any guarantors
- Information identifying the lender and the public administration overseeing the contract
- The duration of the contract
- The exact amount of credit
- Repayment terms
- For credit received in the form of installment payments: the exact cash value of the good or service
- The borrowing rate and the conditions for setting and applying this rate
- The exact Annual Percentage Rate (APR) and the total due
- Repayment terms. The consumer can demand to have documents clearly presenting the figures and repayment duration, as well as the features determining interest rates
- Costs related to maintaining the operational credit accounts
- The rate payable if the consumer does not meet the repayment deadline and the conditions for setting this rate
- Fees in case of not respecting the repayment deadline and the non-payment of the interest rate assigned for late payment
- A statement informing the consumer of the measures taken in case of payment default
- The amount and nature of fees incurred in drawing up the contract
- Conditions for retraction and consequences
- Recourses
- Terms for early repayment
- Conditions for canceling the contract
- Procedures and conditions for complaints
- Other terms and conditions
A consumer credit contract, be it a personal loan or credit consolidation, with overdraft facilities and providing for repayment over a maximum period of three months, must absolutely include the following points:
- The nature of the credit: personal loan, credit consolidation, installment loan, etc.
- Precise and detailed information about the identity of the consumer and guarantors
- Exact information on the identity of the lender and the contact details of the public administration overseeing the contract
- If the contract goes through an intermediary: information on the identity of the intermediary and the contact details of the public administration overseeing the contract
- The contract duration
- The amount received by the consumer and the conditions for credit payment by direct debit
- The borrowing rate, applied modalities, and conditions for determining the borrowing rate
- The Annual Percentage Rate (APR) and the total amount to be paid
- A statement that the lender can always demand reimbursement of the overdraft
- Conditions and steps to terminate the contract
- The nature and amount of expenses incurred in the establishment of the contract and the terms for those expenses to vary
The consumer credit contract must also include mandatory legal mentions written by the consumer. These legal mentions differ depending on the type of credit:
- For opening a credit for a personal loan: “read and approved for (exact amount) euros on credit”
- For other types of credit contracts: “read and approved for (exact amount) euros to be repaid”.
A consumer credit contract for an installment loan or a hire purchase must necessarily be accompanied by an amortization schedule, provided by the lender, detailing repayment: capital amount, incurred expenses, and remaining balance due.
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