Which consumer credit formula to choose?

In Belgium, there are different forms of consumer credit that are not always easy to differentiate. Here is the guide.

Consumer credit is a type of credit granted by banks to individuals to finance the purchase of goods and services that require large expenses. So you can apply for a consumer credit when you want to buy a car, equip your home or just go on vacation.

Consumer credit differs from real estate credit in its lower amount, shorter repayment term and the type of collateral required.

In Belgium, consumer credit brings together different types of loans. Let’s see the differences.

Personal loan

Personal loan

The personal loan, also known as installment loan, is a consumer credit granted to individuals to obtain a movable property or a service.

The peculiarity of the personal loan lies in the fact that it is qualified as ” unaffected “. Indeed, the individual does not need to specify the destination of the sum borrowed. Moreover, since the amounts borrowed are not exorbitant, it is not necessary to build a big file.

In addition, the repayment period and the amount of fixed monthly installments of the personal loan are defined in advance.

Assigned loan

Assigned loan

Among the loans allocated, the car loan, also called auto loan, is the most widespread. Indeed, just like the personal loan, the car loan is granted to individuals through banks or financial institutions.

The difference lies in the fact that the sum borrowed must exclusively be used to purchase the object or service for which it was requested. So you can buy a car, a motorcycle or even finance your studies using an assigned loan.

Revolving credit

Revolving credit

The revolving credit was formerly called a permanent credit. This type of credit consists of lending the individual a sum of money that can be reused as it is repaid. In this way, the borrower can use the money to finance non-predefined purchases.

This formula is usually accompanied by a credit card that can be used in a specific retail network. However, this type of credit is more expensive and sometimes encourages overconsumption.