Do a consumer credit simulation?
The credit simulation allows a borrower to calculate his monthly payments and the cost of his future credit consumption. When it is made with a credit institution, it gives rise to a proposal where all the conditions of the credit, to subscribe a loan with serenity. On which data is a credit calculation based? Explanations.
Consumer Credit Simulation: What’s the point?
Whether you want to take a mortgage, a car loan, a work credit or even a credit redemption to reduce the amount of its monthly payments, using a credit simulator is essential to calculate the feasibility of his project. According to the models of credit simulator, one can calculate:
- the amount that can be borrowed without exceeding its debt ratio;
- the monthly payments that will have to be settled;
- the duration of the credit;
- the total cost of credit (APR) based on its rate and duration;
- the cost of credit insurance.
Note: consider all possible scenarios!
When calculating your credit, do not hesitate to juggle the duration, the interest rate and the loan amount.
For the record, the annual percentage rate of charge (APR) takes into account all the costs related to the credit, namely:
- bank interest (or nominal interest rate);
- application fee ;
- the cost of the borrower insurance (this insurance can be contracted both with the bank granting the loan and with another insurance company);
- the guarantee fee (the mortgage is a guarantee for a mortgage, for example);
and any other fees imposed for the granting of credit
Credit calculation: is it really necessary?
The loan simulator is a simple and effective calculation tool that abounds on the Net. If at first sight, the calculation of a credit may seem superfluous, it is not so. By knowing a part of the amount of the monthly payments that you would have to pay according to this or that duration of loan, and on the other hand of the total cost of the loan, you will have material to study your financial situation. Loan simulation is a preliminary step, without any commitment. If the result sticks with your borrowing capacity, then you will only have to get closer to banks and credit institutions!
Consumer loan simulation: what information to provide?
Before any credit calculation, it is necessary to know the exact amount of his project:
- for a real estate loan, it is necessary to take into account the work to be done, for which it is necessary to ask for estimates, as well as all the ancillary expenses;
- for an auto credit, or credit allocated to the purchase of a household appliance, it is sufficient to know the price of the product and its delivery.
- for a credit redemption, this is the transaction that requires the most information. The credit simulator will indeed request the number of credits to be refunded, but also the details of the financial situation of the borrower: income, charges, etc.
Note: two forms of credit redemption
One distinguishes the repurchase of consumer credit and the repurchase of mortgage credit. The first concerns any type of credit (personal loan, credit work …) and may also include some debts (taxes, bailiff …). As for the repurchase of mortgage credit, it encompasses both consumer credit and real estate credit.
There are two types of credit simulation:
- simple financial calculators, where any credit is simulated by simply recording the amount, the rate envisaged and the duration of the repayment;
- Credit simulators of loan agencies, which are much more accurate because they take into account the borrower’s financial situation and respond by formulating a credit proposal.
For the latter, the information to be provided is as follows:
- the identity, nationality and age of the borrower and co-borrower if there is one;
- family situation: marriage, common-law, Pacs …;
- the number of dependent children and their age;
- household expenses: rent, other credits, energy costs, taxes …
- the amount of the project;
- the professional situation: fixed-term contract, permanent contract, liberal profession, civil servant, intermittent of the show, etc. ;
- the amount of income using pay slips or tax forms;
- eventually, all the ancillary income that the borrower can attest and that are all positive points for his credit application: alimony, real estate income, investment, etc. ;
- if the borrower owns, the title deed of his dwelling.
Consumer credit simulation: the proposal made to the borrower
Once the information is delivered to the credit simulator of the organization consulted, it will make a loan proposal based on the amount you want to borrow. It will take into account the acceptable level of indebtedness:
- for real estate or a car, a banking organization will not exceed on average 33% of indebtedness (including other credits, if any);
- for a repurchase of credit, one can reach 50% for the unique credit.
However, these figures are relative because the organization takes into account the borrower’s remaining living income, which must be at least 600 euros for a person living alone and 450 euros for each member of the same household.
The loan proposal to the borrower includes several mandatory information:
- the amount borrowed;
- the credit rate. The APR is the all-inclusive credit rate, which includes the credit and insurance rates. This rate must still be detailed to know the exact rate of insurance, in case the borrower wishes to take out insurance other than the one proposed to lower the cost of his credit;
- the rate of credit insurance;
- the number of monthly payments granted. For a consumer credit, the average is usually 7 years, or 84 monthly payments, for a repurchase of credit, it is possible to go up to 12 years, or 144 monthly payments;
- the total cost of credit;
- the cost of credit insurance.
This loan proposal has pre-acceptance value for the applicant. It is up to him to return a file containing all the vouchers to obtain his credit. Finally, performing a credit calculation also makes it possible to compare the credits and to choose the most advantageous, in a few clicks and especially, free of charge.
Credit simulation: an example to better understand
The Jacob family is waiting for a happy event and needs to borrow to buy a bigger car. Their choice is on a family car worth 40 000 €. Before approaching banks, brokers and credit organizations, they want to know if their project is feasible.
The couple decides to calculate their potential credit via an online simulator.
Here is the information we ask him:
- Project type: auto credit.
- Amount of the loan: 40 000 €.
- Loan duration: they choose 48 months.
- Fixed rate off insurance: this rate is automatically displayed at 2.95%, they decide not to change it.
Depending on the data entered, here are the results he gets:
- Monthly payments: 883,78 €;
- Total amount due: € 42,421;
- Total cost of credit (ie all interest): € 2,421;
- Fixed APR: 2.95%;
- Fixed debtor rate: 2.91%;
- Monthly cost of standard insurance: 10 €.
Having previously calculated their borrowing capacity, the couple is now reassured: his purchase project will be able to materialize, even if he takes insurance (which will necessarily increase the total cost of the loan). Next step: get closer to the credit companies and find the one offering the most advantageous rate!
Creditstair Credit: an entirely different concept of the loan
You have a project ? Feel free to do a credit simulation with us! Its simple, fast and free. You also keep your anonymity. As of your simulation, we indicate to you whether or not we agree to finance your project. So, in the case of a refusal, you can prospect elsewhere without waiting. Why do we refuse certain files, do you doubtless question? In fact, there may be several reasons for this, including:
- A debt ratio that is too high: we prefer to refuse so as not to put you in financial danger.
- A possible financial instability: for example, you have a one year CDD and apply for credit over 24 months. What will happen to your employment situation at the end of your employment contract? We do not know it as much as you do.
That being so, nothing is definitive! If you are denied today, you may be able to get a positive response a few months later depending on how your situation evolves. Do not hesitate to repeat a simulation when the time comes!
In addition to particularly attractive borrowing rates – and downright unbeatable up to € 3,000 – Creditstair stands out in many ways from traditional credit institutions. At home, there is no bank intermediary: investors directly help individuals wishing to borrow. This short circuit ensures a speed of treatment unparalleled! No revolving credit either – too opaque and dangerous for the borrower – nor postponement of monthly payments, because this lengthens the duration of the loan (and therefore its total cost). The only credit we offer is the fixed rate loan, with constant monthly payments and no bad surprises!
You now have all the cards in hand to carry out your calculation of consumer credit or real estate. With online simulation tools, it has never been easier! Last tip: before borrowing, compare several loan offers. This way, you will give yourself every chance to find the best loan rate!
The three key points to remember about the credit calculation
- It is better to know one’s borrowing capacity beforehand;
- Do not hesitate to make several simulations by varying the duration, the amount and the interest rate;
- To find the most advantageous loan rate, only one solution: compare!