Acceptance by the bank of a consumer loan file is not always won in advance. Fortunately, in case of refusal of his credit request, there remains a final solution for the borrower to finance his project: personal microcredit. What exactly is this device? What are the steps to take?
Personal microcredit: definition and principle
Personal microcredit, also known as social microcredit, is a form of consumer credit. It is specially intended for consumers excluded from the traditional banking system due to insufficient income or a delicate professional situation. This concerns, for example, job seekers, people working part-time, or those registered in the Personal Credit Repayment Incident File (FICP) and who can no longer take out a bank loan.
The objective of personal microcredit is to improve the situation of the borrower. If there are no defined income conditions, the latter must have a personal project to be eligible. But not just any. This project must aim at social integration or professional integration.
Note: appearance and deployment of microcredit in the country
In the country, microcredit appeared in the late 80s. It was then only intended for professionals, in order to finance a business creation or takeover project (professional microcredit). It was not until 2005 that this type of loan spread to individuals.
Thus, the borrower can, among other things, use personal microcredit to:
- the purchase or repair of a vehicle necessary to exercise employment;
- driver’s license funding;
- funding for vocational training;
- face poorly reimbursed health costs;
- the purchase of housing equipment.
How microcredit works?
Personal microcredit works like conventional consumer credit. The borrower makes a monthly repayment including interest from the banking establishment. There are a few differences to note, starting with the amount awarded. Unlike a traditional consumer credit, the amount of which can reach 75,000 dollars, that of a microcredit is limited to a few thousand dollars. It is possible to borrow between 300 and 5,000 dollars, sometimes more depending on the bank. The amount depends on the needs of the borrower, but also and above all on his situation.
Duration of repayment, rate and other costs of a personal microcredit
The repayment term of such a loan is around 6 months to 4 years. Exceptionally, it can reach 5 years. The rate applied to a personal microcredit is most often between 1.5 and 4%. As for the other costs, they are non-existent! The borrower does not have to take out insurance, the prepayment is free and no application fees apply in the context of a microcredit.
How do I apply for my microcredit?
For this form of consumer credit, you cannot apply directly to a banking establishment. You should approach a social intermediary. There are several social support networks, such as:
- employment houses;
- associations with a social vocation (Red Cross, for example);
- local Missions;
- Local plans for integration and employment (PLIE);
- communal social action centers (CCAS).
Whatever the social support network chosen, the person who will welcome you will first study your project and your situation. If you have sufficient repayment capacity, it will constitute with you your loan application file. This file will include a number of documents required by the bank, such as:
- a copy of your ID;
- your last three bank account statements;
- your last rent receipt;
- your last three pay slips (or failing this, a Pôle emploi certificate);
- your last tax or non-tax notice;
- the contract (s) of (a) possible loan (s) in progress;
- the estimate for your personal project.
Your file will then be presented to an approved bank. If accepted, all you have to do is sign your personal microcredit contract.
Note: monitoring of the personal project
In order to limit abuse, the social service requested ensures rigorous monitoring of the borrower’s personal project.
At the service of economic integration, social microcredit is a lifesaving device for people in precarious situations. Especially since it meets various needs. In addition, the management of the loan file is entirely taken care of by the social worker, which relieves the borrower of sometimes long and complex administrative procedures.