Consumer credit is taking on new colors!

Long ignored, too often neglected, consumer credit recovered in France in 2016. In fact, outstanding credit of this type is increasing at a rate of 5% per year, a situation unprecedented for more than six years. Not to mention the amounts borrowed which, too, are experiencing an undoubted increase. Could this be the signal of a comeback of this type of loan?

The good performance of consumer credit in 2016

The good performance of consumer credit in 2016

Perhaps it should be seen as a joint effect of the slowly improving economic context and the good health of mortgage loans? The fact is that the consumer loan, which has been declining for several years, resumed colors during the first half of 2016. The figures advanced by the Cream bank are clear: with an increase in outstanding loans to the consumption of + 5% on average over the year, including 5.2% for the month of April alone, the situation does seem to be improving.

In the second quarter, the increase recorded was 6.7% compared to the appropriate period the previous year. Results which are mainly due to the brilliant health of car loans (+ 21.8% between April and June) and in particular to rental with purchase option, which contributes, with its + 40% over the first six months , to boost all components of consumer credit.

The amounts lent, too, are increasing. The amounts borrowed went from 145.5 billion USD in March 2014, to 151.8 billion USD in December 2015, then to 153 billion in April 2016. A trend that does not affect only France: credit to consumption is increasing across Europe, with an increase of + 2.9% in 2015, for a total of some $ 1,124 billion. Experts note that we are no longer very far from 2010 levels. However, it should be noted that this improvement in consumer credit is concentrated in the countries with the highest economic weight, that is to say France, Germany, Spain and Great Britain.

Is this the sign of a better in the French economy? Difficult to say, because it is complicated to weave clear links between increases in consumer credit and the confidence rate of households. What we observe, however, is a notable increase in “small” personal loans, these loans limited to a few thousand, sometimes a few hundred USD, and intended for the purchase of a used vehicle or for replacement of a household appliance. These increasing personal loans could well reveal, in hollow, the rise of a form of economy of poverty.

French habits regarding credit

French habits regarding credit

The fact remains that credit – whatever it is – is still a good part of French habits. A study carried out by the Cream bank and published in November 2016 gives details of the consumption patterns of our fellow citizens in terms of loans:

  • 16% of loans are mortgages
  • 13% of loans are car loans
  • 8% of consumer loans are used to finance equipment (household appliances, IT equipment, furniture, etc.)
  • 7% of the credits are intended to reduce the monthly payments on another loan
  • 4% of the credits are personal loans intended to reinforce a daily cash flow (to pay bills, late payments, etc.)

The personal characteristics of the borrower also vary depending on the type of credit chosen. In particular, we note that personal loans are most often taken out by single people of around 39 who have to quickly resolve a cash flow problem (65% of cases). That car loans are mainly taken out by singles and couples around 40 years old. And that the work credits mainly concern couples around 44 years of age.

The amounts borrowed vary just as much. The average borrowing is 10,000 USD for a personal loan, over 40 or 60 months. While the average works credit is 20,000 USD over a reimbursement period of 75 months.

How to apply for consumer credit?

How to apply for consumer credit?

If you need to take out consumer credit, for whatever reason, you are free to do so with the lending institution of your choice. It can be a bank or a private organization specializing in credit. Finally, you also have the option of going through a broker who will help you compare the offers. In any event, for your consumer credit, trust serious establishments that are well established (see for example on this site).

Please note: even for a small fee, the establishment may require you to have borrower insurance. You are free to agree to take out ad hoc insurance with this establishment or to contract it elsewhere (which could allow you to save money, the cost of borrower insurance being generally high).

Last point: you have a withdrawal period of 14 incompressible days from the date of signature of your credit request. No establishment can force you to agree to go through with your loan if you decide to end your engagement within the limit of this period.