One in four French people have consumer credit. This credit is used to finance the purchase of a good or service. This is financing obtained by an individual from a credit organization.The borrowed capital must be between 200 euros and 75,000 euros.

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The reimbursement must be spread over a period of more than 3 months. The purpose of a “consumer” loan concerns the purchase of movable goods or a service. Do you want to buy a television? get a lawyer’s opinion on a situation? Consumer credit can help you obtain the cash needed to finance this project.

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A real estate project cannot therefore be financed using a consumer loan. Besides the real estate loan and consumer credit are the only two categories of borrowing existing under French law.

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What are the types of consumer loans?

 

There are different types of consumer credit, the main ones of which are:

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• Personal loan : You can use these funds as you see fit, whether to finance current expenses, major purchases or personal projects. The loan is repaid through fixed monthly payments including the capital borrowed and interest.

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• Revolving credit : Revolving credit, also called "cash reserve" or "revolving credit", is a loan that allows you to have access to a sum of money permanently available. You can use this reserve of money as you need it, repaying the amounts used with interest. Revolving credit offers great flexibility, but it can also be more expensive due to generally higher interest rates.

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• Car loan : As its name suggests, the auto loan is specifically intended for financing a vehicle. It could be a new or used car. This type of loan often offers advantageous interest rates and repayment conditions suitable for the purchase of a vehicle.

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• Work loan : The works loan is designed to finance renovation, development or expansion work on your main or secondary residence. This type of loan can help you cover work-related expenses such as purchasing materials, labor costs, etc.

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• Student loan: The student loan is specially designed for students to finance their studies. It can cover tuition, books, housing, living expenses, and more. Conditions and interest rates may vary depending on countries and financial institutions.

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• Travel loan : The travel loan is a type of consumer loan intended to finance trips, vacations or stays abroad. It can cover transportation costs, accommodation, meals and other travel-related expenses.

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It is important to note that terms and interest rates may vary depending on countries, financial institutions and your financial profile. It is recommended to compare offers, read the conditions carefully and take into account your repayment capacity before taking out a consumer loan.

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What happens to consumer creditn in the event of death?

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A consumer loan commits the borrower and must be repaid, we can legitimately ask the question of knowing what happens to this financing in the event of the death of the subscriber?

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Consumer credit and borrower insurance: what about it?

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Consumer credit (personal loan, assigned loan) is a contractual agreement between a financial institution and a borrower, or co-borrowers.

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The financial institution lends a sum of money to the borrower, who undertakes to fully repay the capital borrowed before a deadline specified in the contract. The agreement specifies different repayment terms, including the overall amount, duration and monthly amount of loan repayments.

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The lending institution, like a bank, must ensure the solvency of the borrower, check the financial elements, state of the bank account, the various credits in progress, both for the sake of protecting the borrower (avoid its overindebtedness) than having confidence in the borrower's ability to repay their debt.

 

In order to reassure the lending institution that the loans taken out will be repaid, the borrower can take out insurance, called “borrower insurance” which may have a more or less significant cost depending on the borrower profile.

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The financial institution will often offer this insurance when offering consumer credit to the borrower who is not obliged to accept. It is even possible that the lending institution places acceptance of this insurance as a mandatory condition in the consumer credit contract, as is often the case with a real estate loan.

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Guaranteeing the reimbursement of your consumer credit through borrower insurance could potentially have a favorable impact on the financial institution's agreement to grant the credit.

 

This borrower insurance can cover the following situations:

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. Illness and disability, temporary incapacity for work, of the borrower

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. Loss of employment of the borrower

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. The death of the borrower

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The borrower will be able to choose the level of guarantee. For each of these guarantees to apply, the conditions specified in the insurance must be met. If this is the case, the insurer will then have to repay the monthly loan payments instead of the borrower.

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Consumer credit: who must pay the debts in the event of the borrower's death?

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If borrower insurance covers the consumer credit contract, in the event of the death of the borrower, the insurer will reimburse the balance of the loan remaining due to the lending institution. 

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In the absence of borrower insurance, the death of the borrower indeed raises questions about the fate of the consumer credit that had been granted to the borrower. The latter having died, the loan cannot therefore be repaid or settled.

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If the loan was taken out with a co-borrower, the latter will be responsible for repaying the consumer credit. He will have to pay the monthly payments on the consumer loan alone.Taking out borrower insurance then makes sense.

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The borrower having died, inheritance law applies. Receivables and debts (liabilities) are transmitted to the heirs if they accept the inheritance.

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The borrower having taken out one or more consumer credit(s), then has a debt towards the lending institution, which is his creditor. This debt is not extinguished upon the death of the borrower, but is part of the heir's share of the inheritance.

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The heir then becomes the debtor of the lending institution and must then pay the monthly payments of the loan of the deceased borrower.

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In this context, if the latter already has loans in progress or wishes to finance new projects, the repurchase of credit, allowing the amount of monthly payments to be readjusted to their income, can be considered to do so.

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Consumer credit: how does death insurance work?

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In the event of the death of the borrower, or one of the co-borrowers, the heirs, if there was only one borrower, or the surviving co-borrower, will have to prove to the insurer, the death of the borrower. The heirs or co-borrower must provide the insurer with a copy of the death certificate of the deceased.

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As borrower insurance is concluded with consumer credit, all you need to do is ask the lending institution for the name and contact details of the insurer.

 

Once the documents have been sent, and the conditions for triggering the insurance have been met, the insurer will take care of the reimbursement of the monthly consumer credit payments, as well as the payment of interest on the loan.

 

The portion of reimbursement by the credit insurer will be determined by the proportions defined when taking out borrower insurance.