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A consumer credit is any credit that is essentially taken out for the purchase of something other than real estate. This can be, for example, the purchase of a car or a household appliance. Consumer credit is strictly regulated by consumer credit law.
There are various forms of consumer credit:
Regardless of the type of credit you choose, the maximum repayment term is legally limited depending on the amount borrowed.
A credit cannot be seen as an additional source of income! Interest must be paid on the borrowed amount. Therefore, never take out a loan if you are not sure you will be able to repay it.
You can take out a consumer credit for:
You can take out a consumer credit at:
Legally, a lender must provide you with all the information included in the standard form "Standard European Consumer Credit Information" ("SECCI"). This form contains the financial details of the proposed credit: such as the amount, the term, the annual percentage rate (APR), and the repayment terms.
A golden tip: Request this form at various lenders and compare them before entering into a credit agreement.
Consumer credit is a service for which payment is required.
In order to protecting the consumer and increasing market transparency, the law has established a uniform method for calculating the cost of all forms of consumer credit: the APR or Annual Percentage Rate.
This cost percentage has the advantage that a comparison can be made between all financial institutions offering the same credit. It is therefore a very useful tool to compare the real costs of different credits. The cost percentage takes into account all the specifics of the credit: the speed at which the capital is repaid, the payment of interest, and the calculation of any costs associated with the granting and/or management of the credit (such as file costs). Therefore, there can be no question of paying additional costs to anyone.
A clearer and less complicated indication than the APR is the 'total cost of the credit'. These total costs must be mentioned in consumer credit agreements. They represent the difference between the total amount you will have to repay (capital + interest and costs) and the borrowed sum. With this information, you can easily determine exactly how much the proposed credit will cost you down to the last cent.
The cost percentage included in the agreement generally remains unchanged throughout the entire duration of the credit, except in certain exceptional cases, where specific information is communicated to you.
It is useful to know that the law sets maximum cost percentages (APR) that lenders are not allowed to exceed and above which it is forbidden to provide credit. These cost percentages are periodically revised based on the evolution of the money market.
When comparing different offers, take into account all elements (purchase price, borrowed amount, APR, monthly installments...) when assessing the cost of the credit.
The total cost of the credit therefore depends on the type of credit, the cost percentage, and the borrowed amount.
The consumer credit legislation stipulates that since 01/01/2013, an open-ended credit facility or one with a minimum term of more than five years must always be linked to a reset period. The goal? To prevent a balance from constantly remaining on your credit facility, thereby ensuring you do not carry a debt burden at all times.
A credit facility is a credit agreement that provides you with an amount that you can draw upon in one or more installments, including through a payment instrument. The amount you have already repaid at any given time can be drawn upon again.
A reset means that you must regularly bring the balance of your credit facility to zero (and thus repay the outstanding amount) before you can draw on the credit again.
At the moment you draw on your credit facility after it has been reset to zero, the reset period starts again.
Each individual institution determines within which period a credit facility must be fully repaid before it can be drawn on again. However, the law sets the maximum periods. Since 01/01/2013, the following maximum periods apply:
Your lender will inform you when the end of the reset period is approaching. However, it is your own responsibility to bring the balance of your credit facility to zero within the agreed period.
If you do not do this in time, you will no longer be able to draw on the credit. Your credit facility will then be (temporarily) blocked.
As soon as you bring the balance of your credit facility to zero, you can draw money and make payments again (provided that your credit has not been terminated). At that moment, the new reset period begins.
If you do not respect the reset period, not only will your credit facility be blocked, but this will also be recorded in the Central Credit Register (CKP) at the National Bank of Belgium. Your lender may also charge default interest on the outstanding amount and even terminate the credit agreement.
Worried that your monthly financial burden will become too heavy after losing your job or due to other unforeseen circumstances? Do your mortgage and other loans suddenly weigh much heavier on your budget? Talk to your banker about it, and together we can look for a solution. Read all about it in the brochure.