The credit rate is an essential point to analyze when taking out a personal loan. What are the different types of interest rates? How to get the best personal loan rate? How are rates calculated? All explanations on Angelica.fr.
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- Cheap consumer credit
- Compare consumption credit
- Consumer credit calculator
- What is the rate of a personal loan?
- Different personal loan rates
- Fixed rate or variable rate?
- How is the personal loan rate calculated?
- What is the best rate for a personal loan?
- Compare to find the personal loan at the best rate
What is the rate of a personal loan?
A personal loan is a type of consumer credit. As with all credits, when you buy a personal loan, you agree to repay the borrowed capital, but also interest. These interests refer to the additional amount required by the bank or credit institution to pay for the service rendered.
The interest rate is the additional amount you pay to the lending institution and is expressed as a percentage.
As a reminder, the personal loan is a type of consumer credit that allows Angelicar any type of personal project: student loan, purchase of a car, purchase of a motorcycle, purchase of appliances, work, travel for example.
Barometer of personal credit rates
Personal loan rate: short term
Different personal loan rates
When talking about personal loan rates, such as for a consumer credit rate in general, it is important to agree on the terms used. Indeed, when you inquire about a personal loan offer, banks and credit agencies tell you two types of loan rates:
- The borrowing rate, or nominal rate: this is the proposed interest rate excluding ancillary costs;
- The annual percentage rate of charge, or APR (formerly TEG, for the overall percentage rate): this is the proposed interest rate, including costs (such as opening fees, application fees, account maintenance fees, guarantee fees)….). On the other hand, the APR does not generally include borrower insurance.
To study an offer of credit, it is better to refer to its APR. This indicator gives you a better idea of the total amount of the personal loan.
Fixed rate or variable rate?
Another point of vigilance to remember when looking for a personal loan: the nature of the credit rate. Some personal loans are fixed rate, while others are floating rate. What is the difference?
A fixed rate remains unchanged for the duration of the contract. The rate defined at the signing of the loan offer is therefore the same throughout the contract. On the other hand, a variable rate (or revisable rate) can move up and down during the loan, depending on the price of certain financial indices.
What type of rate to choose for your personal loan?
If you have a choice between a fixed rate personal loan offer or a floating rate offer, evaluate the pros and cons for deciding and choosing the best angel solution.
- The fixed rate guarantees stability and avoids risk-taking. The amount of monthly repayments is the same every month. On the other hand, it does not decrease even if the financial prices are down;
- The variable rate reduces its monthly payments if the market moves downward. On the other hand, if the market moves upwards, you take the risk of paying more.
There are also mixed rate personal loan offers. In this case, the rate varies over two periods: the first period is fixed rate while the second period is variable rate.
How is the personal loan rate calculated?
It is the banks and credit agencies that freely set their personal loan rates. These can vary according to offers, profiles, debt ratio, borrowing capacity… Their only constraint: not to exceed the rate of wear. The rate of wear is the maximum permitted legal loan rate. It is redefined every quarter by the Banque de France.
While each institution is free to set its own credit rates, there are still some constants:
- The longer the credit period, the higher the credit rate;
- The higher the amount borrowed, the higher the credit rate.
Thus, to benefit from the best credit rate, the ideal is to favor loans over short periods and low sums. Banks generally offer attractive credit rates in these conditions because they take less risk.
What is the best rate for a personal loan?
Unsurprisingly, the best rate for personal credit is the lowest, that is, the one for which you pay the least interest. The best personal loan rate is the one that guarantees you the most competitive personal loan.
Compare to find the personal loan at the best rate
Today, banks and credit organizations that offer personal loans are numerous. Not always easy to see clearly and find the loan most suited to his financial situation / his personal situation and the most economical. Fortunately, there is an ideal solution to achieve this: use a consumer credit comparison online like Angelica!
This free and non-binding tool allows you to access personal loan quotes. Thus, thanks to the credit simulation, you can compare the credit rates of different offers and select the best one. Your search for a personal loan at the best rate is made easier and you no longer have to apply for a loan.