Making a credit cannot be improvised and requires a carefully considered decision. Here are the three essential questions to ask yourself to take out a loan with complete peace of mind. That’s it, it’s decided: you are going to renovate this old bathroom or replace your old boiler before it breaks down. But now, these projects are expensive and you do not want to put all your savings in them.
So you would like to take out a loan to finance these projects but make a loan, it looks complicated and it is scary with all these stories of over-indebtedness.
Do not panic! Here are the 3 essential questions to ask yourself before applying for a loan:
1. How much can I borrow without risk?
Before borrowing, carefully consider your repayment capacity. As a general rule, do not devote more than a third of your income to repaying all of your outstanding loans (real estate, consumption, etc.). Of course, this recommendation depends on your personal situation, total household income, etc. In a word: keep both feet firmly on the ground!
You can either do the calculation yourself or contact the advisers of the lending organizations who will analyze your budget with you.
2. How much will my credit cost?
If you have already carried out credit simulations, you have probably noted the existence of a mysterious acronym: the APR or Annual Effective Annual Rate.
The APR corresponds to the total cost of the credit for the consumer: in addition to the interest charges, it, therefore, includes administrative costs, commissions, and other possible costs. Any interest on late payment, costs, and compensation arising from non-compliance with your borrower obligations are added to the APR.
Most credit agencies have simulators available on their website. By comparing your different simulations, you can find the offer that suits you best.
3. Signed, is it signed or can I still give up my credit?
As precipitation is a bad adviser, the law gives you a 14-day cooling-off period to give up your credit, without having to justify yourself.
This period starts on the day of the conclusion of the credit agreement. This is called the right of withdrawal.
To exercise this right, you will have to send the lender, within the time limit, a registered letter to inform him of your decision. In some cases, the renunciation of credit can be made by simpler means, for example, an email.
The procedures for exercising the right of withdrawal, as well as its consequences for the consumer, must be included in the credit agreement.
Please note: giving up credit does not automatically mean giving up the purchase (for example, a household appliance, a kitchen, a car, a vacation, etc.) for which you have requested financing.
Conclusion: It is essential to properly measure the impact of a loan in your budget through the amount borrowed and the APR.