After a retreat that followed the 2008 crisis, intentions to use credit are rising in France in 2016. Similarly, in the opinion of the Observatory of credit to households, the feeling of households holding credits are constantly improving. The credit is used to finance personal projects and unrealized dreams. More than a supply of fresh money, credit is an investment tool that today participates in the management of the household budget.
As a loan is also a bet on the future financial capacity of the borrower, it is essential to study it well. One of the essential tools for studying a loan is the simulation of credit. It concerns real estate loans, consumer loans and loan consolidation.
Among the essential types of credit simulation, there is the simulation of the annual percentage rate of charge (APR) which determines the real cost of the credit, the simulation of the debt ratio and that of the borrowing or purchasing capacity of all. seekers. Depending on the type of simulation to be done, there are nuances in the information to be provided to online calculators.
How to define credit simulation
The credit simulation is a preliminary study of the conditions of a credit. It consists of providing personal information to online calculators that instantly return you the result of your request. The development of the internet has made this approach accessible in just a few clicks. There are 3 main calculators including the APR, the debt ratio and the borrowing capacity. Each calculator has specific information to provide.
The Global Effective Rate Calculator (TEG) simulates the real cost of credit. The actual cost of the credit is the sum of the borrowing rate of all the credit plus the expenses of files and insurance. These same elements are the basis for calculating the APR. To simulate the TEG, you must fill in:
- the desired amount of money that will take into account the amount requested and any personal contributions
- the desired loan duration
The expected results are:
- the annual percentage rate of charge applied by the financial institution
- the amount of monthly payments or maturities
- increased monthly insurance
- the rate of insurance according to lender
- the overall cost of credit
With these credit simulation results, one can accurately calculate the total cost of the credit envisioned with each offer. To this end, it is necessary to carry out several simulations of the APR on the different proposals of the market before making a choice.
The calculator of the debt ratio will simulate the level of your expenses according to your current income. It allows you to assess your solvency threshold in order to prevent all risks related to subsequent loans. The recommended ceiling debt ratio is 33%. It can go up to 50% for a consumer loan. To establish this rate, it is necessary to inform the dedicated calculator on:
– the resources of your household including fixed incomes (spouses or lender alone). This may be rent or a pension received, an allowance etc.
– your expenses whether it is the current expenses, the expenses of the house, a pension paid, the repayment of an old credit or others.
A credit consolidation should be done when the burden of your previous loan is too large for your finances. The monthly payments are lighter but, the duration of the maturities is more extended with the disadvantage of a higher final cost
The borrowing or purchasing capacity calculator allows you to know your purchasing power or borrowing according to the credit. To carry out this credit simulation, you must provide the calculator with information on the creditor’s lending rate without insurance, the duration of the credit, the type of your loan project (work loan, auto loan, purchase loan, mortgage loan, mortgage loan, loan consolidation, revolving loan …), the amount of the monthly payment of your choice.
Credit simulation is just one of the steps to validate in your loan project. It must precede a request and interview with a commercial advisor at the bank or financial institution.
The credit rate
The credit rate is the Total Effective Rate (APR). For all loans, the TEG is based on the base rate still called the debtor’s nominal rate applied on all maturities, borrowing fees and the cost of any insurance. The annual percentage rate of charge or TEAG is an annualized variant of the TEG. If the base rate is fixed, the TEG is easier to establish than in the case of a fluctuating nominal rate.
To have an interesting TEG, it is necessary to make several simulations and compare the different offers. In some loan cases like home equity, the value of your personal contribution can play on the base rate level of the bank. If your contribution exceeds the 10% commonly established by the banks, they will be more likely to lend you at a lower rate.
What credits simulate
All loans available on the market today benefit from online simulation tools. These instruments have been advantages developed following the Lagarde reform of 2010, to provide solutions that protect the consumer by ensuring a diversity of choice through competition. One can therefore simulate his unassigned personal credit, an assigned loan, a mortgage or a credit redemption.
- the appropriated appropriation
The credit allocated is a credit related to the purchase of a good or service. The loan is conditional on the delivery of the product and the loan agreement must mention the purpose of the financing. The car loan provided by a dealer, the purchase credit granted by a store or a credit granted by a merchant site may be qualified as an assigned credit. The client must most often make a personal contribution and the creditor will give him the rest.
The assigned credit is sometimes free for the borrower. In this case, it is the seller who bears the interest and costs of the loan without the borrower losing the protection he owes when he pays the credit. The processing fee of this loan can be up to 1% of the loan and the overall rate varies from 4.5 to 9% depending on the duration and the amount allocated.
The other feature of this loan is that you borrow only what you need for the purchase. But what it does for you to buy a good or service is not necessarily what you can borrow. This is why the simulation of the assigned credit should be carried out.
- Simulation of the assigned credit
To carry out the simulation of an assigned credit, you must enter an online loan calculator. You need the amount of the credit, its duration, the cumulation of your income as well as that of your expenses. It is important to take any assigned credit to know precisely your borrowing capacity and your level of indebtedness. In addition to the cost of credit, this information is essential to the purchase decision.
- The personal loan
Unlike the credit allocated, the personal credit does not require any justification for the future use of the resources allocated. This funding is for unpredictable expenses such as repairing the broken down vehicle. It can be granted by a bank or credit intermediary within 24, 48 hours or more depending on the nature of the loan, the creditor and the lender’s file. Personal credit online gives the advantage of having a fixed rate at the beginning as well as the duration of the loan and the maturity of the monthly payments well defined in advance. Among the many types of personal credit are the purchase credit conso, personal credit work (the bathroom …), personal auto loan, the revolving credit that can accompany a loyalty card or a credit card and the grouping of personal credit. One can contract a personal credit up to 75000 €. Knowing that a credit agreement is a commitment to repay, think about simulating his personal credit to know its impact on your budget.
- Simulation of a personal credit
The important simulators are the APR, the borrowing capacity and the debt ratio. The simulation of this credit gives you the estimate of your monthly payment but, there are nuances in the information to be filled in for the personal credit work. Instead of the duration of the credit, the total duration of the work must be provided. The simulator will give you the estimated amount of monthly work to be paid back each month.
- The mortgage
The mortgage loan is a credit to individuals dedicated to financing the purchase, construction or renovation of a home. You can lend at fixed or variable base rate according to a financial index (euribor 3.6 or 12 months). The monthly repayments to be paid must not exceed 30% of your income and disability death insurance unlike unemployment insurance is taxed. The best-known real estate loans are the zero-interest loan, the housing equity loan, the real estate loan, the housing savings loan, the young housing loan, the home building loan and others. The sums invested are often very important hence the interest of anticipating the impact of your credit project with the mortgage simulation.
- Real estate mortgage simulation
With the real estate credit simulation tools available online, one can simulate in addition to monthly payments, the borrowing capacity and the debt ratio, notary fees or even estimate the amortization table of the future loan. To do this, fill in the mortgage calculators on the desired amount, the amount of the personal contribution, the desired duration of the credit and your resources and expenses.
Taking a loan can have a big impact on your budget. This is why credit simulation is essential for the success of your loan project. top