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An installment loan with a term of 120 months is attractive and extremely interesting for some borrowers with a not so high salary. However, this loan also harbors dangers. Therefore, it should be carefully considered for what purpose such a loan should be applied for.

Not only suitable for buying a property

Until a few years ago, an installment loan with a term of 120 months was only intended for the purchase of a property. However, some banks offer this loan for other purposes. He is no longer earmarked for this. This long term may be ideal for people with a low monthly income. Nevertheless, unpredictable events can ruin even the best financial planning.

For this reason, you should consider carefully whether a loan with such a long term is necessary at all. It is perfect for real estate financing. This is particularly the case with low interest rates. At the moment, interest rates are at a very low level, provided that an installment loan with a term of 120 months is worthwhile for the purchase of a property.

Make the term depend on the amount of the loan

With most loans, borrowers can choose the term themselves. The only exception is the foreign loan. The rates are already fixed in advance. All other loans are flexible. With a loan amount of 30,000 dollars, a term of ten years is a good idea, but whether that makes sense is another matter.

In addition, the interest on this loan is also significantly higher than if a shorter term were chosen. The banks justify this step with the higher default risk. A lot can happen during the term, which can shake the financial framework. It is also possible that the bank requests that you take out residual debt insurance.

Observe the conditions

If you choose an installment loan with a term of 120 months, you should pay attention to the right bank. A lot can happen in ten years and the borrower could suddenly make money. It is therefore important to find a bank that does not require prepayment penalty for special repayments. Loan seekers may not have much success with branch banks, but online banks are known for their better conditions.

Anyone looking for financing with such a long term should use the comparison calculator on the Internet. You can quickly find the right bank with the right offers in the program. The use of this comparison calculator is free of charge. They are independent and quickly deliver the latest results.

The social accession loan has been put in place by the State since 1993. It is a device enabling families with modest incomes to access property.

What is the social accession loan?

Created by the State in 1993, it allows the borrower to benefit from Personalized Housing Assistance (APL), granted by the Caisse d’Allocations Familiales (CAF).

Please note that from January 1, 2018, the Accession APLs only apply to the purchase of old housing, located in zone 3. For those who subscribed to the PAS before this date, the conditions remain the same.

Who is he talking to?

The Social Accession Loan (PAS) is a mortgage for people with low incomes.

In order to benefit from the social accession loan, it is imperative to meet means conditions, fixed according to the geographic area of ​​the targeted accommodation and the number of future occupants.

In order to benefit from the PAS, you must:

• Being French

or

• Hold a residence permit

If you are an APL holder, know that it will be easier to access the PAS, rather than a standard mortgage.

What does it finance?

The social accession loan is intended to finance the following operations:

• Acquisition of land and construction of housing on this land
• Acquisition of new property
• Acquisition of old property and improvement works (if necessary)
• Work in an existing habitat, with the intention of saving energy, to enlarge it (by extension or by raising it) or to transform it into a room which was not intended to be inhabited before.

It is imperative that the amount of work is at least equal to $ 4,000 . In addition, if the loan finances works, they must be executed within 3 years of the loan offer. The accommodation must also become the principal residence of the borrower, at the latest 1 year after the end of the work or the purchase.

What types of accommodation are eligible?

With exceptions (mentioned below), the social accession loan is granted with a view to acquiring one’s main residence: by building it or by buying it. In this case, the borrower must live there 8 months a year.

It is nevertheless possible to rent the accommodation during the first 6 years of the loan, in the following cases:

• Death
• Divorced
• Dissolution of a PACS
• Disability
• Unemployment of more than one year
• Purchase or construction for retirement or return from abroad / DOM-TOM of the borrower
• Professional mobility: if the distance between the new place of the activity and the property subject to the loan is at least 50 km or involves a journey time to go at least equal to 1 h 30.

The property must then be rented empty (no seasonal rental or furnished rental). In addition, the amount of the rent and the resources of the tenant must not exceed the ceilings of social rental properties.

In addition, for people who are already owners, the social accession loan can be used to carry out work. And this, always for his main residence.

Note: since 1 st January 2016, the housing is not forced to serve as a primary residence. It can be used as rental property, second home or professional / commercial premises.

Where to send a PAS request?

You must go to a credit institution (a bank, for example) having signed an agreement with the State.

You can obtain a PAS from a credit institution (example: bank) having signed an agreement with the State.

Before that, comparing the various offers of PAS before subscribing one, can prove fruitful. Indeed, according to the banks, the interest rate can fluctuate within the limit of the authorized ceiling. This comparison is made using the APR (Annual Rate).

What are the elements taken into account when applying for a PAS?

In order to be eligible for the social accession loan, you must provide the following:

• Income of the applicant (s)
• Household composition
• Debt ratio
• Personal contribution
• Guarantees offered

What are the resource conditions set?

To be eligible for the social accession loan, the amount of his income must not exceed the threshold of the fixed ceilings.

Account must also be taken of the Reference Tax Income for year N-2 and the geographic area of ​​the accommodation concerned (area A, B1, B2 or C). Added to this is the number of people destined to inhabit the accommodation.

Means conditions by household size and geographic area

Number of people living in the accommodation	Zone A	Zone B1	Zone B2	Zone C
1	$ 37,000	$ 30,000	$ 27,000	$ 24,000
2	$ 51,800	$ 42,000	$ 37,800	$ 33,600
3	$ 62,900	$ 42,000	$ 37,800	$ 40,800
4	$ 74,000	$ 60,000	$ 54,000	$ 48,000
5	$ 85,100	$ 69,000	$ 62,100	$ 55,200
6	$ 96,200	$ 78,000	$ 70,200	$ 62,400
7	107 300 $	$ 87,000	$ 78,300	$ 69,600
8 and up	$ 118,400	$ 96,000	$ 86,400	$ 76,800

The estimated reference year is the penultimate year preceding the loan offer (year n-2).

For example, if the PAS application is made in 2019, you must take into account the 2017 tax reference income (it can be found on the 2018 tax or non-tax notice).

What are the interest rates in effect for the PAS?

First, be aware that the SSP interest rate is capped. It varies according to the duration of the loan and the credit institution of your choice.

In addition, for borrowers benefiting from APLs, these are deducted from the monthly payment of the loan for the calculation of the debt ratio.

The interest rates offered for the PAS can be:

• Fixed
• Variable
• Flexible (fixed rate and variable rate)

Rate type depending on duration

	Less than or equal to 12 years	Between 12 and 15 years old	Between 15 and 20 years old	More than 20 years
Fixed rate	2.30%	2.65%	2.65%	2.75%
Floating rate	2.30%	2.30%	2.30%	2.30%

 

What is the repayment duration of the PAS?

The repayment period of the SAP extends over a period ranging from 5 to 30 years. However, it is possible to modify this duration in order to reduce or extend it for a period of maximum 35 years.

What are the advantages of PAS?

The social accession loan is guaranteed by a real security (mortgage or equivalent). This is not included in the land advertising taxes. The PAS finances all of your real estate project.

In addition, the costs of examining the file are capped and the notary’s remuneration costs are reduced.

Additional Information

Note that the PAS can be added to other types of loans. Among them :

• The zero rate loan (PTZ),
• Zero-rate eco-loan,
• Home savings loan,
• The housing action loan,
• An additional loan granted to French returnees from overseas who hold a compensation certificate,
• The loan for civil servants,
• The bridge loan, pending the sale of the previous home

In addition, if your loan is bought by another bank, you can no longer benefit from APLs. In order to obtain more favorable conditions, it is possible to renegotiate the loan with your bank, without risking losing your grants.

If you buy two properties, you have to make two different compromises in order to separate the rental unit from the main residence. This will allow you to be eligible for the PAS.

Do you want to borrow money cheaply? Make sure you make a comparison online, because you can be sure that you do not pay too much and that you can always opt for cheap borrowing. Take a good look at the interest rate, among other things, since it largely determines the extent to which you have the option of taking out an advantageous loan. You can see the interest rate, as it were, as the ‘costs’ for borrowing the money.

Of course, when borrowing cheaply, the interest rate should be looked at very carefully. It will always be cheap to borrow money if there is a favorable interest rate. When borrowing money cheaply, therefore, particular attention should be paid to this. Because the interest rate can be used as the benchmark for cheap borrowing, it immediately becomes much less difficult to estimate what exactly the perfect loan will yield.

Borrow money online cheaply

It is best to borrow cheaply online, since you can count on the most competitive offers there. The online credit providers incur relatively low costs and therefore have the opportunity to pass on the advantage to you, which makes borrowing cheap. Among other things, this ensures that you do not have to pay for the large and well-known offices, as well as for the large number of employees. Instead, you get an affordable loan, which gives you the opportunity, for example, to buy a new car.

Not only can you borrow money online cheaply, but also looking for a loan via the internet helps to keep a good overview of the range of loans available. This makes it a lot easier to compare loans and this allows you to create the opportunity for yourself to borrow cheaply. There are a large number of online providers where the interest rate is very low, but it will make a difference whether you opt for a renovation loan or a personal loan, for example. You can observe the differences online and of course you can also be helped with the loan simulation. This will be able to make clear the difference in costs, so that you can quickly see whether borrowing cheaply with a specific loan and with a specific provider is in it for you.

Loan simulation

Do you want to borrow cheaply and are you especially curious about the costs, over the entire term? Then provide a loan simulation, which ensures that you can see exactly what the loan will cost and that you will not be faced with any surprises. Are the costs per month decreasing, are they correct or how do you ensure that you can pay the costs during the first months? Keep an eye on the different elements and compare the simulations of loans with multiple banks. That way you get a good overview of what is possible and what costs this will entail.

So it is also true that with cheap money borrowing there is actually no escape from the loan simulation. Because a simulation provides clarity with regard to cheap borrowing and its use is very simple, it remains one of the most important things to do with borrowing money. A cheap loan is therefore always within reach and cheap borrowing will in most cases be the aim for every consumer.

What does cheap borrowing cost?

The question of what cheap borrowing should cost exactly cannot be answered very specifically. It is clear that when there is a high loan this will automatically also mean that the costs will also increase. The reverse, of course, applies to a relatively small loan. The common thread in the story, however, remains the interest rate of the loan. For cheap borrowing, that should definitely be something to hold on to, and the eyes should be focused on this to achieve the right goal. The moment that there will be a low interest rate, this can hardly result in an overpriced loan. So if you would look purely at the cost of borrowing money, it will always be the case that the party that has the lowest interest rate for a certain loan will also offer the cheapest loan.

You could also take a look at what it does to your loan, for example, when you set the loan simulation to a few months longer or shorter. This can also affect the costs and with cheap borrowing, the intention is of course that you try to take out the ideal loan for yourself with a lender. For cheap borrowing it is therefore important that you try to set everything as favorable as possible with your loan – which you could already achieve with a loan simulation – in order to come to a cheap loan as standard. If you choose to spread the costs of your loan over many months, this will ensure that you can reduce the monthly costs somewhat. This does not mean, of course, that you also create a cheap loan for yourself in this way, because in the end you will be paying off for a longer time and the total costs will probably also be higher.

Cheap borrowing saves a lot of costs

It is of course no secret that cheap borrowing can save a lot of money. By not doing the preparatory work for borrowing money well, it is very likely that a loan will soon become too expensive and that while this may not be necessary at all. As said before, the preparatory work must therefore be in order with regard to the comparison of loans. It is therefore of little use to rush into borrowing money. It is much better to take a little more time in advance, which means that you can borrow cheaply. The longer the loan runs and the higher it actually is, the higher the savings can be saved if you go for a cheap loan. So always try to keep borrowing money cheaply as a goal and make an effort to achieve this, because in the end you are of course very happy if you can negotiate a loan that entails low costs. Incidentally, cheap borrowing is also partly dependent on the type of loan you will choose.

Difference between loans

With cheap borrowing, there is still a difference between loans. For example, borrowing cheaply with a loan such as the car loan will already look very different than borrowing cheaply in the case of a personal loan. The interest rate therefore differs for the various loans and that therefore irrevocably also means that cheap borrowing will clearly not be the same every time. So also check which loan offers the best options for what you want to do with the money, but at the same time keep a close eye on the interest rate. Although a car loan is an ideal loan in most cases for cheap borrowing, it makes little sense to look at this if you need a loan to renovate your home. So first determine the type of loan for yourself and only then do you engage in cheap borrowing and comparing lenders. Some loans are not as cheap as others, but you’d better find the cheapest lender with the specific loan you need.

Take out a cheap loan

Make sure you have done your comparisons well before deciding to take out the cheap loan you found. If you have been doing a good job comparing, you can also say with certainty that you are actually going to take out a cheap loan – and perhaps even the cheapest loan. However, that you have found the right loan is not enough, because this still does not offer you the certainty that the provider will also allocate the loan to you. Of course, you cannot do more than apply for your loan and then it will then have to become clear whether borrowing cheaply from that specific provider is indeed an option.

The provider with whom you apply for your loan will check whether they consider you to be creditworthy. They do this, among other things, by checking whether you have ever had to deal with payment arrears, for example, by consulting the blacklist. It will also be examined whether the income is at a good level and whether this is therefore sufficient to bear the costs of the loan. For cheap borrowing you are therefore not only dependent on comparing, but ultimately also on the judgment of the provider with whom you want to borrow money.

Are you thinking about taking out a loan? Nowadays you can just do this online, so you don’t have to leave the house. On the other hand, it is important to think carefully about, for example, the type of credit you want to take out. Do you want to use a personal loan or a revolving credit? With the help of a credit, you can save afterwards for a certain purchase. Determine the goal you have in mind and choose the appropriate form of credit based on this.

When taking out a loan, think carefully about the level of the interest rate that you pay, as it also provides a cheap or an expensive loan. Finally, you should consider the term of the credit. The longer a credit runs, the more expensive it will become. On the other hand, too short a term makes the credit unaffordable.

We have listed the important information for credit purposes. Go through the various parts and ensure good preparation, to take out the ideal credit and make a nice purchase or keep some extra money.

Personal loan or revolving credit

When you want to take out a loan, it is first of all important to find out what goal you have in mind. You can use a consumer credit, in the form of a revolving credit or a personal loan. There are variants of this, such as the car loan that closely resembles a personal loan.

The personal loan stands for borrowing a fixed amount, at a fixed interest rate and with a clear term, which is also fixed. The credit offers a great deal of clarity and is quite popular thanks to this fact. You borrow a certain amount, for example $ 10,000. You agree with the bank what interest rate you will pay on this amount, an interest rate that will in most cases be fixed. This ensures that you know where you stand for the coming years, with the personal loan you will certainly not be faced with surprises. In addition, you determine the term that best suits this on the basis of the amount you wish to borrow. You agree with the lender that you will, for example, repay the credit in 10 years. This can be done by means of a linear repayment or another form of repayment. Determine whether you want to repay a fixed part of the loan amount annually, or whether you want to take major steps during the first few years. You can compose the personal loan completely to your personal wishes, which of course already indicates the name of the credit.

You also have the option of taking out a revolving credit. This type of credit works completely differently, for example because the interest rate is often variable. You agree with the bank a maximum amount that you can borrow, the credit limit. There is no need to withdraw this amount right away and you only pay interest on the money you actually withdraw. Do you agree on a credit limit of, for example, $ 10,000 and do you only need $ 1,000 for that? Then you only pay interest on this amount, you do not have to pay anything on the other $ 9,000. Would you also withdraw that amount, for example to cover high costs? Then from that moment you pay interest on the total amount. With the revolving credit, you always have some extra money with you, so you can compare this with ‘overdraft’ in a bank account. The interest rate is usually variable, which means that the monthly charges on a revolving credit can go up or down. You can also re-record any repayments made, so there is less of a clear schedule for repaying the borrowed money.

A bank can tell you more about the differences between the personal loan and the revolving credit. In addition, you can make an online comparison yourself and use a simulation to find the credit that best suits the purpose you have in mind.

Borrow money on installments for various purposes

The moment you use a credit, it is wise to find out what purpose you have in mind. You can save afterwards, as it were, as it is not necessary to collect the (entire) amount for the purchase in advance. For example, do you want to buy a new car, because the old one has broken down, and therefore use car financing? If you don’t have the money for that yet, you can use a credit. This way you ensure that you can immediately receive the key, but on the other hand it is not yet necessary to put the full amount on the table. You use the term to bring the costs for the car together and save, as it were, afterwards. Of course you pay costs for this on the basis of the interest rate that you are charged for the credit.

The difference between the personal loan and the revolving credit becomes clear to many people by thinking carefully about the various goals that you can achieve with it. With a personal loan, you can buy a new car or a kitchen. You know in advance what amount you need for this and you have to pay that in 1x. The personal loan is then the ideal choice, also because of the clear schedule to repay the credit. For example, some credits lend themselves better to quick loans than other types of loans, as is the case with a mini loan, for example.

Are the children going to study and do you wish to have extra money on hand? There is an expensive period at the door, but it is difficult to estimate exactly what you need in advance. You can then use a revolving credit, which allows you to withdraw unlimited money up to the credit limit. Do you seem to need less than you thought? You only pay interest on the amount that you actually withdraw. In this way, revolving credit is a good choice when you need more money over a period of time and it is not yet clear exactly how much this will be in total.

Rate of interest

In any case, if you want to use a credit, it is important to think carefully about the level of the interest rate, by comparing several credit providers. The higher the interest rate will fall, the higher the costs per month. From that perspective it is interesting to look for the lowest possible interest rate. After all, this ensures that you have the opportunity to significantly limit the cost of the credit. Seen in particular over the entire term, a lower interest rate ensures that costs can remain limited.

On the other hand, keep in mind that the very lowest interest rate doesn’t always have to lead to the best credit. In any case, take into account the term of the credit, which we will discuss below. In addition, make sure that the other conditions for borrowing money are in order, for example with a view to possible death during the term. Do additional conditions also apply, or are there administrative costs, for example, to take out the credit? Add this to the interest rate to arrive at the total charges for a particular credit that you wish to use. For example, you will be able to determine to what extent there can be cheap borrowing when making a certain choice for a loan.

Term of the credit

Finally, you should at least take the term of the credit into account to avoid paying high charges in the end. You take out a credit for a specific term, the period that you use to repay the money. If you make repayments in the meantime, the amount of the credit will decrease a little further. As soon as you make the final payment to the bank, you can repay the credit in full and thus the term also ends.

A personal loan always has a fixed term , this does not have to be the case with a revolving credit. In addition, with a personal loan you ensure that you repay more and more of the loan amount towards the end of the term, with a revolving credit you have the option of simply withdrawing the repaid amounts.

It is also not unwise to estimate the term of the loan, because as is known, a term with a shorter duration will cause you to lose more money every month, while this is of course the other way around with a longer term expensive. Provide a good middle ground, so that the monthly costs do not rise too high and the ultimate cost of the credit is reduced as much as possible.