Do you want a change of scenery this summer, but don’t have the budget to finance your holiday project? Consumer credit is not always the best option. Here are our tips.
E-mails, advertisements on the Internet or on TV… Have you noticed? In recent weeks, you have often been asked to take out consumer credit. It’s normal: it’s the time of year when the French make their plans come true. Improving their living environment, for example, to better enjoy the summer. Go on vacation too, and why not far from home. According to a recent survey (1)40% of French people planning to go on vacation will fly abroad, a rate that has risen sharply (+12 points) compared to 2021.
It makes sense: after two years of Covid, the desire for a change of scenery is strong. Treating yourself to a trip, however, is not a given. Even less this year, marked by a sharp rise in prices, especially transport. According to another survey (2)59% of French people say they encounter difficulties in organizing their holidays because of inflation (rise in the price of plane tickets, trains and rentals, petrol, etc.).
In this context, we understand the opportunism of specialized credit establishments: you are, in fact, a certain number, currently, ask you about vacation credit.
Payment facilities often more suitable
Should we give in to temptation? The answer lies in one word: caution! In principle, it is better reserve the use of credit for project consumption, i.e. non-recurring purchases, explains Sergio Monteiro, founder of the comparator CheckmonCredit. Clearly, taking out a loan to pay for the one-week stay that you treat yourself to every spring or the house that you rent every summer is not advisable. If you do not have the necessary money immediately, payment facilities are more suitablepleads Sergio Monteiro.
That’s good: more and more travel or rental booking sites allow you to spread your payment over several instalments. These facilities have existed for a long time, but have remained on the margins. Bankers did not like this product, which pays little and is quite risky, continues Sergio Monteiro. The novelty is indeed the generalization of these offers, in particular on the internet.
Be careful, however, to know where you are stepping. In the case of a repayment in 3 or 4 chances, it is not a consumer credit in the strict sense, but what is called a split payment. Its characteristics: a short repayment period (3 months maximum) and a limited cost, when it is not simply borne by the merchant. Be careful, however, tre certain to be able to assume the chances of reimbursement. Unlike conventional credit, these payment facilities are granted without an in-depth examination of your financial situation. And late penalties are very expensive.
Payment in installments: how much are late penalties?
Some merchants offer payments in 5 or 10 installments. In this case payment facility turns into consumer credit. It often takes the form of a revolving credit, sometimes linked to a bank card. Caution in this case: sometimes useful as a budget management tool, revolving credit remains expensive, with rates that often flirt with wear and tear. Its principle – a line of credit that is renewed and remains permanently available – also encourages draping, even if it is better supervised than in the past.
Yes to credit for the trip of a lifetime
There is a scenario where consumer credit is suitable for financing a vacation project: for an expensive trip, as we do not do every year. For example, a long and distant family journey. The type of holiday, of course, that not everyone can afford. People repaying a loan for leisure expenses in general are also relatively rare: less than 1% of households in 2020, according to figures from the French Banking Federation’s Household Loans Observatory, compared to 15%, by example, which repaid a car loan.
If you’re considering the trip of a lifetime credit, here are some tips. Start, first, with check that you are not able to finance it out of your savings. With the rise in interest rates, noticeable since March on the consumer credit market, you will have little chance of finding a personal loan with a lower rate than what a secure investment like the Livret A pays for you. more advantageous to mobilize part of your available savings – taking care of course to keep a few months’ salary in advance in the event of a hard blow – then reconstitute it little by little.
Consumer credit: your project threatened by rising rates?
If you do opt for credit, start with contact the bank where you hold your main account: it is there, without doubt, that you will still have the best chance of obtaining a good rate. In generalist retail banks, in fact, consumer credit is above all a customer retention tool. Thus, although they obviously never sell loss credit, they are often willing to cut back on their margins, unlike specialized credit institutions for which this is the main, if not the only, source of income.
Consumer credit: our advice for taking advantage of the best online offers
(1) Europ Assistance and Ipsos holiday barometer, conducted in France among 1,000 consumers aged 18, via an online questionnaire. Survey conducted between April 26 and May 16, 2022. (2) OpinionWay study for Stairwage, carried out between May 18 and 19, 2022 with a sample of 1,062 people, representative of the French population aged 18 and over.