Consumer loan: interest, commissions and key points before signing

Consumer credit is an option to obtain financing for an extraordinary expense, such as a renovation or carrying out studies. As it is a loan, the holder will be able to use the capital provided by the bank as needed and must return the money along with interest and commissions, within the agreed deadlines.

As with a personal loan, this type of financing is easier to obtain than a mortgage although, as explained by the Bank of Spain (BdE), “they are more expensive because the interest that must be paid to the bank is higher.” Therefore, it is important to pay attention to the conditions agreed upon in the opening contract and compare the different options that the banks will offer.

As with other banking products, to formalize this type of loan, a contract is signed in which all the conditions are specified. But before signing this document, entities must deliver pre-contractual information with the characteristics of the requested loan with sufficient advance notice to analyze. The BdE recommends reviewing the conditions offered

Compare according to the conditions of each loan

First of all, attention should be paid to the period associated with the interest rate offered. In that sense, the BdE warns that, for example, 1% monthly is much more than 8% annually. And to avoid confusion when comparing interest rates, it is recommended to use the APR of the offers you are considering, since it includes all the costs of the operation and reflects the real price of the loan.

Among the costs that can be added is the opening commission. When a loan is requested, the entity has to carry out a series of administrative procedures to formalize the operation and for which it may charge the opening commission, which is usually a percentage of the loan amount and sometimes has a minimum amount. Another fee that is included is for possible partial or total early cancellation.

On the other hand, it is important to check if taking out the credit implies the acquisition of another additional product, such as a card or insurance. If so, request pre-contractual information on these products, weigh their costs and analyze whether the offer as a whole interests you,” the BdE recommends.

Once all this information has been analyzed, if the client agrees, the credit will be formalized with the signing of the contract. In addition, the bank will ask the client to prove their identity, justify their income – for example, latest payslips or receipts supporting pension collection – and authorization to consult your data at the CIRBE (Risk Information Center). ). of the Bank of Spain). Depending on the import requested, they can also ask about aspects such as dependents, rent or other fixed expenses, in order to estimate the free income available to cover this new debt.

What is the right of withdrawal?

But, even once signed, the debtor can back out and renounce the credit through the so-called right of withdrawal. This right entails the loss of effect of the contract. That is, the loan would cease to exist and can be applied without having to give any type of explanation to the entity. Of course, it is only available for consumer loans and credits between 200 euros and 75,000 euros and must be clearly specified in the contract. In addition, the right of withdrawal may be requested within a period of 14 calendar days from when the loan is signed.

This withdrawal does not entail any cost for the debtor, except for the compensation of non-refundable expenses paid by the lender to the Public Administration. However, you will also have the obligation to return the borrowed capital, along with the interest accumulated during the days that the money has been used. From the moment the decision is communicated, the debtor has 30 calendar days to make the return.