When you need a personal loan, unlocking an amount to make a personal contribution is not always easy. To avoid this problem, lending institutions offer their clients loans without contribution. What are the advantages and limitations of this formula? How to get a loan without contribution ? In which cases a personal contribution is necessary?
Is it still possible to borrow without input?
Lending institutions provide credit without requiring personal input. Their clients are looking for simple, fast and transparent ways to get a loan. Lending without contribution meets this expectation. This is especially true when the amounts involved are small. But even for the most important projects (car loans, construction work, personal loans, etc.), it remains possible to borrow without input.
The key is to demonstrate its ability to honor its commitments and to respect the conditions set by the credit organization.
How to obtain a credit without personal contribution?
Before granting a credit without personal contribution, the lending institutions examine the financial situation of the borrower. The many conditions to fulfill can be classified in 3 categories:
- a stable work situation, which ensures regular income over time. Concretely, this very often involves a contract of employment on permanent contract, with a seniority of several years to reinforce the solidity of the file;
- a comfortable living space, which allows a sufficient level of current expenditure. By deducting the due dates from the amount of income, the credit institution calculates a remainder to live. This must be sufficient to maintain a satisfactory standard of living once the loan has been secured;
- a flawless financial history, which reassures the ability to meet its commitments. Flawless repayments of old credits, and good account management in the past give confidence and increase the chances of obtaining a loan without personal contribution.
How to obtain better credit terms?
Unlike real estate loans, personal contributions are rarely required to obtain a personal loan. But to advance this amount not borrowed at the beginning of a project strengthens its financial strength. The contribution remains an effective way to show commitment and to concretely start the project. It is also a way to obtain significant advantages in the setting up of a financing file:
- shortened credit life;
- more competitive interest rates;
- other advantageous financial conditions (deferred repayment, etc.).
With a personal contribution, room for maneuver is more important to negotiate more competitive credit conditions.
Reduce the cost of financing
Making a personal contribution reduces the repayment period or the amount of monthly payments, since the amount borrowed is less important.
Example: financing the purchase of a car of € 10,000.
- without contribution, over 3 years and at a rate of 5%, the monthly payment excluding insurance is 300 €;
- with a contribution of € 2,000, the monthly payment excluding insurance is only € 240;
- with the same contribution of € 2,000 and maintaining the monthly payment at € 300, it is possible to reduce the loan term from 36 to 30 months.
In the end, the cost of financing the project is reduced thanks to the personal contribution.
The limits of personal contribution
Despite these undeniable financial advantages, it is sometimes preferable to make a credit without contribution. This is particularly the case when the proposed rates depend on the amount of the credit.
Example: 5% interest rate for an amount less than € 10,000 or 3% for an amount greater than or equal to € 10,000. The car buyer of the example above then has interest to borrow without input if he wants to benefit from the declining discount rate.
You must also be careful not to draw too much on your precautionary savings to make your personal contribution. Keeping a minimum of cash is essential to deal with an unexpected event.
Example: Making a € 2,000 contribution for a personal loan can be risky if it amounts to completely emptying a precautionary savings account. Conversely, it can be financially attractive, if despite this contribution of € 2,000, the borrower keeps a comfortable level of savings.