What is an interest rate?
Whatever type of consumer credit you choose (car loan, motorcycle loan, work loan, revolving credit, personal loan …), it can be broken down into 2 parts:
- Capital , that is, the amount needed to complete your project and that you borrow;
- Interest , that is, the additional amount required by the lender credit organization to pay for the service rendered.
The interest rate is the additional amount you pay to the credit institution expressed as a percentage.
What are the rates for consumer credit?
There is no single consumer credit rate: not only do consumer credit rates vary by establishment, but also vary by product (auto loan, motorcycle loan, work credit, revolving loan, personal loan …) and according to the profiles of the subscribers.
When you inquire about a credit offer, lenders usually tell you two types of rates:
- The borrowing rate (or nominal rate): this is the interest rate proposed by the credit institution without any additional costs;
- The APR , or annual percentage rate of charge (formerly TEG, overall effective rate): this is the interest rate proposed by the credit institution with ancillary costs, such as opening fees, application fees, fees account management, guarantee fees …
The lending rate and taeg are two different indicators. To compare offers of credit consolidation, better focus on the APR: it will give you a more refined indication of the amount to be refunded.
Fixed rate and variable rate
The credit institutions can offer you two types of rates: a fixed rate or a variable rate . A fixed rate remains unchanged throughout the term of the loan. The subscriber thus knows from the beginning the total amount of his conso loan. Conversely, a variable rate may change, up or down, during the term of the loan.
How are the consumer loan rates calculated?
The calculation of consumer credit rates depends on credit institutions, which are free to set them as they see fit. However, these must respect one imperative: do not exceed the wear rate . This is the maximum legal rate that credit organizations are allowed to practice for their offers. It is the Banque de France that sets the rate of wear each quarter.
The rate of wear protects consumers against excessive interest rates. Loan institutions that exceed it are subject to prosecution.
Some constants in the calculation of the rates
If each institution defines its consumer credit rates according to its rules, there are still some constants:
- The higher the amount borrowed, the longer the duration of the credit, the higher the proposed rate, simply because the lending institution takes on more risk under these conditions;
- On the contrary, the lower the amount borrowed, the shorter the duration of the loan, the more attractive the rates offered.
- A large personal contribution makes it possible to benefit from a more competitive loan rate.
What is the best rate for his consumer credit?
Unsurprisingly, the best consumer credit rate is the lowest! Depending on your profile (the nature of your personal project, your family situation and your professional situation, your income conditions, your borrowing capacity, your debt ratio …), the credit agencies can offer you credit rates conso variables. The best rate is therefore the cheapest and most competitive, that is to say the one that will commit you to the most advantageous consumer credit.
Compare to find the best rate
Unlike real estate loans, consumer credit rates are trading very little. To find the offer at the best rate, there is an effective solution: use a consumer credit comparison online like Athos.fr. After filling out simple information about your project, online loan simulation gives you access to credit agency quotes in just minutes. These include the interest rate of the consumer loan. You just have to compare offers to find the lowest rate and apply for your loan!