Personal loan, credit pool, mortgage, auto loan, … different types of credit coexist in Belgium and it is not always easy to navigate.
But whether you need to borrow money to do some work in your house, buy a new or used car, or go on vacation; the credit request you can make will not be the same.
How to differentiate the different types of loans before applying for credit? The explanations are here!
What is the difference between a loan and a credit?
Concretely, a loan and a credit are synonyms that mean exactly the same thing!
For example, when a financial institution (whether a bank or a credit company) gives money to a customer, it will be called a loan or a loan. The same is true when a customer borrows money. He then applies for a loan or a loan application.
How to choose your credit?
To choose the right loan, it is necessary to understand the different types of loans available. In Belgium, four major credit families coexist and allow you to borrow money at rates and with conditions of grant adapted to your situation.
Mortgage or mortgage
Also known as “real estate credit” or “real estate purchase”, the mortgage loan is perfect if you want to invest in real estate.
With a mortgage , you can:
- Buy a new or used home;
- Build the future home of your dreams;
- Carry out renovation work in your old building;
- Buy a mortgage that you would have already taken out.
This type of loan is not to be considered lightly since it commits you for a period of at least 10 years to repay fixed, semi-fixed or variable monthly payments . This period is also the minimum if you want to benefit, in return, from a deductible tax benefit each year of your tax return (provided you meet the various conditions).
The auto loan / motorcycle / mobilhome or “car loan”
The car loan is an installment loan that allows you to borrow money to finance the purchase of a new or used vehicle.
Like the mortgage loan before it, this type of credit can only be contracted to buy a specific property (in this case: a car or a motorcycle) with a borrowed amount corresponding to the exact value of the property .
The auto credit application can be made directly to the car dealership, and you start paying the monthly payments once the loan is accepted and the vehicle delivered. Be aware, however, that the dealer who will offer you a loan will be directly linked to a bank with which he will be associated.
We can therefore only advise you to prefer directly to a credit company (such as Mid Finance) , which can offer you a wider range of conditions, often more adapted to your salary level and your personal situation.
Personal loan or installment loan
Unlike home loans and car loans, the personal loan (or installment loan) is a consumer credit “all reasons” that requires no proof!
The maximum amount (the ceiling) that you can borrow is determined by both your need (your specific request) and your salary level (and therefore your ability to repay it on a monthly basis).
It does not matter what the motive is and what you want to do with it. Money lent by the paying agency (the bank or the credit society) can be used for what you want to do. In principle, no paper proof will be required.
Finally, be aware that the personal loan has many advantages:
- Depending on the duration and the amount borrowed, you can benefit from a lower interest rate;
- The monthly repayments are fixed, so you know the amount and duration directly;
- With this type of loan, you can apply for credit directly online;
Looking for a personal credit at the best rates? Apply online for credit on the Mid Finance website and receive a first notice as soon as possible.
Credit consolidation or credit redemption
The credit consolidation (or loan redemption) consists of consolidating all personal credits, credit cards and credit lines you have already subscribed to, in order to reduce the total of your monthly repayment.
For many households caught in the vicious circle of over-indebtedness, the purchase of credit is a solution allowing them to head out of the water and limit their debt ratio. If this solution reduces your monthly charges, remember that you are starting a new credit, extending its duration and increasing its interest rate.
The credit company repays all your outstanding loans and offers you a brand new loan, with a new (fixed) monthly payment and a new term. The monthly amount to be reimbursed is then calculated based on your actual income and current expenses.