HSBC France

The basics you need to know about consumer credit

There are different types of consumer credit. Your bank will recommend credit that suits your needs and plans. However, it is best to know exactly what is being talked about before applying for new credit. Here are the characteristics of the two main types of consumer credit: personal loans and student loans.

Personal loans

The principles of personal loans

Personal loans belong to the consumer credit family of lending which consists in financing solutions for current consumer goods.
A personal loan is not earmarked for the purchase of a specific product. The sum can be used freely without having to justify the nature of your purchase to your bank.
On the contrary, car or student loans finance very specific expenditure earmarked for a specific purpose which relates to the purpose or service financed.

Amounts agreed and guarantees

The amount of a personal loan must be less than €21,500 to qualify for consumer protection guarantees (loan offer and cancellation period). Given the loan amounts, personal loans are generally agreed without any security.

Repayments and arrangement fees

Personal loans are repayable over a relatively short period of time: between 3 months and 7 years. When you enter into the agreement, you will know the exact amount of your monthly payments, the loan period and the total cost of the loan. You also have the option of repaying the outstanding capital on your loan in part or in whole at any time. The arrangement fees are sometimes fixed but are often proportional to the loan amount.

Please note

Personal loans are therefore not linked to a contract to purchase an asset or a service, so if the goods are not delivered or are found to be defective, the monthly instalments must still be repaid.

Student loans

The principles of student loans

Student loans are a type of consumer credit which allows you to fund the cost of your education, associated expenses (e.g. purchasing a computer or a scooter) or living costs (e.g. rent or food).

This type of loan can be divided into 2 periods:

- the first period covers the time when the student is studying during which he or she repays only the insurance or the insurance and interest;

- the second period is when the student has completed his or her studies and repays the capital and the interest if this has not been repaid already.

Amounts granted and guarantees

The amount granted depends on what you need, the maximum amount generally being between €20,000 and €30,000. If you wish, your bank can offer you loan insurance.

Please note: when deciding the total amount of your loan, remember that your repayments will begin when you start work, in other words, at a time when you may need more funds to set yourself up than you do today.

A student loan may be for a duration of 9 years in total. In terms of security, banks usually demand a deposit from a parent or relative.

Provision of funds

The funds lent may be made available in one or several instalments. It is preferable to use your funds gradually as the need arises as that reduces the interest expense and may also ensure that you have regular funding available for the duration of your studies.

Repayments and arrangement fees

The repayment of student loans is very flexible.
During your studies, you can choose between:

- a repayment holiday, i.e. you only pay the insurance premiums
- partial repayment, where you repay interest and insurance premiums. The last option prevents you from getting further into debt each year. After your studies,
as soon as you start work, you will repay the outstanding balance on your loan. Early repayment is possible. Student loans are often exempt of arrangement fees.

Example of a personal loan

For a personal loan of €7,000 for a period of 24 months. At the Fixed Annual Percentage Rate (APR) of 3.97% (fixed bank lending rate of 3.90%), you will make 24 repayments of €303.66 each, equivalent to a total amount of €7,287.84 (of which €287.84 is interest, without optional insurance, with no arrangement fee).
The cost of optional loan insurance calculated to provide cover against Death and Total and Irreversible Loss of Autonomy for a single customer under the age of thirty years is €1.05 per month at the time of this offer and is added when your loan repayments are due (if you have opted for insurance)(**).

A loan is binding and must be repaid. Please check that you are able to make the repayments before committing yourself.

HSBC has a lot of know-how to share with you to help you make the plans that you hold dear a reality. Why wait? Contact your local bank advisor right away.

* Dial +33 810 246 810 from abroad.
** Subject to your application being successful. The customer has a 14 day cooling-off period starting on the date of signature of the loan agreement offer
(Article L.311-12 of the French Consumer Code). The bank would like to offer you insurance under its optional franchise insurance contract No 001/900/29 taken out by HSBC France with HSBC Assurances Vie (France), a company governed by the French Insurance Code.
Within the limits of the provisions of the contract and subject to acceptance by the insurer.

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