All you need to know about leisure credit
To get away from the daily grind, we sometimes feel the urge to travel or treat ourselves to a state-of-the-art flat screen. Leisure credit is used precisely to compensate for the lack of cash flow of a borrower with such projects. This type of loan - included among consumer loans - presents a relatively simple process to obtain.
What are the types of leisure loans?
It is important to differentiate between the allocated leisure credit and the personal leisure loan. An affected credit consists of dedicating the amount borrowed to the planned project. This is for example the case of a travel credit where the borrower is required to present proof of his trip to his credit provider. The personal loan or unallocated credit, it does not require any proof and is used to finance the personal projects of the borrower.
In both cases, the amount of the leisure loan is limited to US $ 75,000 and the repayment term can be up to five years. The loan contract must be adapted to the financial situation of the borrower and take into account the borrowing capacity of the latter. Depending on the type of leisure loan to which one wishes to subscribe, the borrower can apply to a bank or a credit organization without proof . Subscription via an online site is also convenient and interesting. Note that the total cost of a leisure loan, calculated on the basis of the interest rate, differs depending on the credit provider.
What is the rate for a leisure loan?
The APR (Annualized Global Effective Rate) of an allocated leisure loan generally varies between 4.5% and 9%. That of an unallocated leisure loan is generally between 2.5% and 7.7%, and can even reach 10%.
You should know that the rate of a leisure loan varies considerably from one financial organization to another. This is why it is advisable to make a comparison of the various offers on the market in order to obtain cheap credit . It is possible to compare the offers of different financial organizations after finding out about them. Otherwise, using an online credit comparator is also a quick and practical solution.
In addition, the rate applied is also based on the amount of money borrowed and the repayment term chosen. It is necessary to specify that the longer the duration of the credit, the more the lending institution applies a high APR.
Is it necessary to take out credit insurance?
In the case of a leisure loan, it is possible to take out consumer credit insurance to protect against possible problems. This insurance covers various risks: death, disability, job loss, etc. Note that subscription to credit insurance is not compulsory. There are two possibilities to subscribe to consumer credit insurance: take the insurance offered by your lender, or opt for an insurance delegation with another company of your choice. Comparing credit insurance offers is also useful, especially if the loan amount is large.
Credit insurance taken out with another company must present guarantees equivalent to those required by the lender. Otherwise, the lender can refuse the delegation of insurance in the event of non-compliance with this condition by justifying its decision to the borrower. Note that the lending institution is prohibited from increasing the interest on its credit on the pretext that the borrower has taken out loan insurance elsewhere.