Take out a loan VS use your savings

Published on by Delphine from OltottMesz

A topical question!

Long slowing down since 2007, the consumer credit sector grew for the third consecutive year in 2016, with an increase of 6.4% (according to the Association of Financial Companies). In fact, last year, 38.8 million US dollars of consumer credit were granted to French households.

This growth is supported in particular by a historic drop in the rates offered by credit institutions. A period of fierce competition between organizations, which are fighting to cut rates. Demand is naturally driven by this dumping, borrowing has never been so cheap!

Credit companies no longer bother to ask for a whole bunch of supporting documents. We note the gradual disappearance of affected credit, where the borrower had to justify his request for credit by providing an estimate (car, work ...). Today the transaction is purely financial and lending institutions care much more about their growth than how you spend the loan amount.

Why take out a loan rather than using your savings?

Whether you have money set aside, savings or not, "Should I borrow?" Is a legitimate question.

More and more people prefer to borrow rather than release and spend the funds they have placed in a passbook, a PEA, life insurance etc. However, it is a reflex on the part of people who have the means to finance themselves.

First of all, the cost of credit today is relatively painless up to a certain amount of borrowing. For example, a loan of 5000 € over a period of 24 months will not cost you more than 200 €. This is largely the gain that you can expect over the same period with your various assets.

It is also advisable to keep a precautionary savings, to maintain a certain financial independence and to be able to cover certain everyday costs (work, repair of a vehicle, medical expenses…). These things are never anticipated and always come at the worst time. When these events happen, the costs must be paid quickly and it is better to be able to dip into your savings than to be forced to take out credit. Imagine that your loan file is refused for some reason and you have no more savings. How will you do?

Even if they do not want to use credit institutions to finance a project, more and more French people have understood that it was a precautionary choice, which allows them to be more independent and which allows them to better anticipate future expenses and projects.

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