The personal loan is one of the fastest and easiest financing solutions. This is an unallocated consumer credit for individuals in need of cash. Its interest rate depends on the amount requested and the length of the repayment period. The terms of this type of loan cannot be changed once the contract is signed. The borrower is free to use it as he sees fit. There is however a maximum amount and also a minimum amount imposed for various reasons.
Why a maximum amount of 75,000 euros?
If the loan exceeds 75,000 euros, the borrower must remain vigilant with regard to the clauses of his contract. Because in this case, a retraction or an early repayment can cost him very dearly. The Srivener law only protects credit subscribers of less than 75,000 euros. It also offers them the following security and protection guarantees:
- The right to a withdrawal period of 14 working days after the signing of the loan contract;
- The right to a 15-day reflection period so that the potential borrower can make comparisons;
- The right to a contract consisting of clear information and directly specifying the true credit rate.
The minimum amount to borrow is 200 euros and below this amount, the borrower is also not protected by the Consumer Code. If you have big projects to finance, find relevant advice on this CTBA .
The debt ratio and borrowing capacity of the personal loan
If you want to access a personal loan online, the value of your debt ratio must not exceed 33% of your income. How to know your debt ratio? To do this, you just need to perform a simple calculation by following this formula:
Debt ratio: borrowing cost multiplied by 100 and then divided by the amount of your net income
The borrowing charge includes all the monthly installments of the loans already contracted and planned. When it comes to your income, it’s important to include your bonuses and non-wage income. Most banks only take fixed income into account. However, mentioning other types of income in your personal loan application file will allow you to earn points (commissions, housing allowances, family allowances, etc.).
Let’s come to the borrowing capacity, determining it allows you to know how much you can borrow. To calculate it, you simply have to use an online credit simulator . It is based on the amount of monthly income, the debt ratio and the credit rate offered by the banking institution selected by the borrower.
The duration of the personal loan is also a key parameter! The Lagarde law (that of July 2, 2010) allowed the maximum amount to increase from 21,000 euros to 75,000 euros. The repayment period can range from 4 to 84 months, depending on the amount granted.