Consumer loan
Credit not tied to real estate, used to fund goods, works or a cash need, capped in amount and term by regulation. It is granted faster but carries higher rates than a mortgage. If poorly managed, such loans weigh on the debt ratio when applying for a property loan.
Key points
- Capped in amount and term by consumer-credit regulation.
- Rates are generally higher than mortgages due to the absence of a real-asset guarantee.
- Always declared when applying for a mortgage; directly affects the debt ratio.
- The legal cooling-off period protects the borrower against a hasty decision.
Frequently asked questions
Why must the broker audit consumer loans before building a mortgage file?
Consumer loan installments are added to mortgage payments when computing the debt ratio. An unanticipated car or personal loan can push a file above the 35% threshold and cause a refusal, when an early repayment or prior consolidation would have made the file fundable.
How does the cooling-off period work on a consumer loan?
The borrower has a statutory period after accepting the offer to withdraw without penalty or explanation. This right is a matter of public policy and cannot be waived by contract. The broker always informs the client of this window to prevent rushed decisions under commercial pressure.
What is the difference between a tied and an untied consumer loan?
A tied loan is linked to the purchase of a specific asset; if the sale falls through, the credit is automatically cancelled. An untied loan simply makes funds available with no conditions on use, leaving the borrower free to spend as they wish but without automatic protection if the underlying purchase is cancelled.
In practice
A client applying for a €200,000 mortgage with €900 in available monthly income cannot afford an ongoing car loan at €300/month if they want to stay below a 35% debt ratio; a broker who spots this loan early can recommend early repayment before submitting the file.
Official sources
- Consumer credit: personal loan · Service-Public.gouv.fr
- Obtaining a mortgage loan · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr