Do you know how personal credit works? This is a very common topic in the financial market, especially among those who are, for some reason, negative, or need extra money to invest in a business or simply pay off a debt.
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The truth is that everyone, at some point, will come across this issue, whether in their personal life or in their family and social life. Therefore, understanding what it is, how it works and what types of personal credit there are can make all the difference.
With this in mind, we developed this complete content, with everything you need to know about personal credit and how to apply for it. Just continue reading and check it out!
What is personal credit and how does it work?
Personal credit is, in a nutshell, a more “liberal” loan modality, That is, once you qualify for the loan, you do not need to justify or explain what purpose it will be used for.
This is the main difference between a personal loan and other types of loans and financing, where the candidate borrows an amount for a pre-defined purpose.
Still, as it is a loan that involves interest rates and the need for planning for payment and repayment of installments, the person looking for one needs to be aware of points such as:
- Total Effective Cost (or CET), which refers to the total value of the loan, taking into account the interest incurred;
- the Interest rate, which may vary depending on the financial institution chosen — the recommendation is to always look for the lowest possible rate, of course;
- and the Payment Term available, so you can plan and achieve a lower monthly amount for each installment.
With this information in mind, it is time to know how to differentiate the different types of personal credit, which are basically divided into 3: assigned, non-assigned and secured by assets.
Types of personal credit
To choose the type of personal credit that is ideal for you and your financial situation, you need to have a good understanding of each type of credit. This way, you can make the best decision based on your needs.
Non-consigned
Simply put, non-consigned personal credit represents a common loan, between people or financial institutions.
This modality is common and is intended for all those who work with a signed contract, have regular bank accounts, or are self-employed and entrepreneurs.
Through it, the customer undertakes to pay all installments, through a bank slip, direct debit or other methods in days until the debt is paid off.
Consigned
Personal credit, in turn, is focused on more specific audiences, such as INSS retirees and pensioners or public servants.
Another difference is the way in which the installments are paid: there is a discount directly from the payroll or amount received by retirees and public sector professionals.
With guarantee of goods
On the other hand, personal credit secured by assets, as the name suggests, requires the customer to leave an asset, such as a property or vehicle, as collateral of payment.
This means that if you are late with your payment, or if you are no longer able to continue paying the installments, the bank or financial institution can take the asset left as collateral.
So, the financial planning is essential to ensure that installments are paid on time and that the borrowed money is used properly.
What are the advantages of personal credit?
Personal credit has numerous advantages. The main one is the simplicity of access and the low level of bureaucracy involved.
Furthermore, there is the benefit of not needing to justify the purpose of the money obtained, which gives you the freedom to fragment and direct the amount more assertively according to your needs and aspirations.
Finally, a major difference between personal credit and other types of loans or financing is the consumer choice, research and bargaining power.
Since there are several financial institutions that offer products such as personal loans, consumers can calmly analyze each proposal and plan according to the suggested deadlines. It is even possible to request changes and make counteroffers.
Who can take out a personal loan?
Anyone can take out a personal loan, but a citizen with greater financial stability is more likely to be able to a loan faster than those who are in default.
Therefore, retirees and pensioners, public servants, registered workers and micro-entrepreneurs with stable income are in the easiest scenarios to obtain personal credit.
How to plan before taking out a personal loan
There is no point in applying for a personal loan to pay off debts, for example, if in the future you will not be able to pay off the loan — this would be a very dangerous mistake, which would put your assets and comfort at risk.
Therefore, there are some precautions to be taken before even approaching a financial institution in search of personal credit.
The first step is analyze your billing and establish a reasonable amount that could be spent on paying the installments, without this affecting your personal life.
Try, for a month at least, record all your earnings and expenses, to identify patterns, whether they are deficient or not. You can do this with a simple spreadsheet or even in a notebook, writing by hand.
Right away, analyze the proposals that you obtained from financial institutions and identify those 3 points mentioned at the beginning of the article: the CTE, interest rate and payment term. Check whether these values are realistic and fit within your budget.
Finally, avoid scams by never accept a personal credit proposal that requests an advance deposit. Companies don't work like this and will never ask for an advance payment to release your money. Be careful!
Discover the loan options at Consulta Cred!
Conclusion
We hope this article has clarified your main doubts about how personal credit works and its specificities. Did you realize how simple it is to apply for a personal loan to meet your financial needs?
Just have caution, attention and a lot of planning to fulfill all obligations and be successful during the loan process.
Also remember that, to avoid taking unnecessary risks, the best thing to do is to take out personal credit with serious companies that really have a market presence, as is the case with Cred Consultation!
