Questions regarding unsecured loans in France

[Daft Doctor]

Hi, we are coming to the end of a house build and will be several thousand euros short by the time all the various extras and finishing touches inside and out are added up.  We don't want to commit to long term finance for the shortfall, since we are selling an apartment which will (eventually) release enough capital to balance the books, and we already have a mortgage in place on that property.  Our aim is to be mortgage free on the new house.

Our french bank are currently offering relatively low rate unsecured finance to account holders for a variety of projects, including building works and renovations, and this is therefore of interest to us to help plug the gap.  I don't however have any experience of obtaining such finance in France, so have a few questions which some of you may be able to answer either from knowledge or experience.

Firstly, am I right in assuming that any such loans are subject to the global loan payments cap of 33% of taxed income, or are the requirements a little more relaxed?  Do they tend to refer to the RFR figure from your avis d'impôt for the income figure or will they take other evidence into account.

Secondly, are you normally required to produce a devis for any works you intend to finance with the loan?   Thirdly, do you have to show that the work has been done as per the devis at some point, either before the loan will be released, or at some point afterwards? 

Finally, if you apply for such a loan but ask for more than the bank are willing to lend, would as a general rule it be the case of an outright refusal, or would it more likely be a case of 'we can't give you x euros but we can offer you y euros instead'?

As always, any insight much appreciated, including any other ideas of how to lay hands on the money (legally of course!) [;-)].   

[idun]

 I never knew any french bank we were with to be other than strict with regards to 30 or 33 percent of our income. And that always included all loans, y compris the car.  We were with quite a few banks  over the years.

They also always wanted us to take out an assurance with the policy and it was made clear that if we did not, then they would be less likely to give us the loan.

And every bank we were with wanted to see what the money was spent on.

Sounds like you need an appointment with your conseiller. Also make sure that your loan can be  paid back early without penalities.

[NormanH]

You will also need to be sure that the bank will lend to retired people.

It seems silly, as a pension sounds secure, but not all banks see it like that here

Les spécificités du crédit aux seniors

Pourquoi est-il parfois plus difficile d'emprunter lorsque l'on est retraité

? D'une part, lors du départ à la retraite, il peut être difficile de continuer

à payer les mensualités en raison de la baisse de revenu. D'autre part, plus

l'emprunteur vieillit, plus les risques que prend la banque sont importants, et

les établissements bancaires hésitent donc à prêter au-delà d'une certaine

limite, 70 ans en général.

Toutefois, les banques et les assurances se sont adaptées au vieillissement

de la population, et des offres spécifiques sont apparues pour permettre

d'emprunter jusqu'à 80 ans.

http://www.pap.fr/argent/credit-immobilier/jusqu-a-quel-age-emprunter/jusqu-a-quel-age-emprunter-a10

[EuroTrash]

" Do they tend to refer to the RFR figure from your avis d'impôt for the income figure or will they take other evidence into account."

I would be very cautious about producing evidence to any institution that showed a higher income than what I had declared to the taxman...

[Daft Doctor]

A point well made EuroTrash.  The reason I mentioned the RFR and other evidence however is that although 2012 was our first fiscal year in France, we didn't move over until May, so our 2012 RFR is based on 7 months rather than 12.  [:)]  

[EuroTrash]

OIC.

However I think the bank will be able to divide by seven and multiply be 12 (though one does sometimes wonder, with French banks), so probably best to stick to the official figures?

[Val_2]

My advice from having loans in France for all sorts of things for what it's worth and we have one currently for renovation works. Firstly you approach your bank that you are with and sound them out, they will want to know what the loan will be for and will want to see estimates, prices etc from artisans to verify that the loan is genuine and not for financing expensive cars or holidays instead.

They will then take all your details and how you intend to pay the loan back monthly which means proof of income, tax return papers etc and they work out a projection for you.The branch will normally say yes or no at the initial meeting but all loans have to go before head office to be approved and this can take upto six weeks sometimes before you hear anything. Once your loan is approved subject to the paperwork being submitted by yourselves etc, papers are signed and the money is deposited inyour account. However........

this is very important - MAKE SURE YOU TAKE OUT ENOUGH INSURANCE TO COVER THE REPAYMENT IN FULL OF THE LOAN. If you do not and many banks insist that you do take out insurance, you could end up losing your home. My OH died four months after taking out a loan to buy a new lorry, thank god we took out the insurance too because I could not pay it off and it was all covered by this BUT some insurances on loans do not cover the first two months or repayment so beware of that!  You also need to make sure you DO NOT sign away your home as collateral because should you default or die with nothing to pay off the repayments by the family who inherit your debts, the bank will take your home and sell it regardless of the market price just so long as they get their money back.

You can also pay loans back before they are due to finish if you get enough money back from elsewhere without incurring penalties but again check what you take out. This is not the UK loan and credit culture here, non-payment is a very serious offence and calling in loans takes very little time via the courts.

Another thing too that people do not realise, if you have in the past, had an "incident" with ANY bank account in France where you have gone into the red, or got demands via huissiers or the Trésor Public, these stay on your dossier at the central records of the Banque de France and will come to light because lenders check on your history and you have to get this cancelled officially if the incident is no longer outstanding.

[Daft Doctor]

Thank you Val_2, that is all very pertinent advice, and I realise they will want insurance to cover the value of the loan (even though it is hidiously expensive in France, probably because very little is done online, all through agents who need paying commission). l think we need to cobble together some devis for work to be done, then go down to see the local conseiller and discuss with them what we could reasonable expect in terms of help.

[Val_2]

Yes you will be asked to provide detailed estimates for the work to be done and broken down showing costs from professional artisans or if you intend to do it yourself, you will need printed quotes for materials from suppliers to proove what the loan is going to be used for, they will probably refuse if you just go in and show some odd bits of paper. Its the same for car loans, the bank requires the details of the vehicle to be purchased by the seller and the costs involved, they don't just give you a loan here on your say-so and usually the repayment must not exceed more than one third of your monthly income, hence why you must show your income on paper as well to proove this.

The insurance is not expensive in the scheme of things and most banks insist you take it out with the loan running alongside as it will their own bank's policy for this purpose. Normally the first initial appointment will give you an answer which then will be followed up by head office and their panel who meet once per week to agree loans (well CA here do)

[idun]

 The insurance should be some euros a month, and they will ask medical stuff.

If you watch french tv, something I reckon everyone should do when new to France for lots of reasons, you would have seen an advert for a magasine ´Notre Temps´ which is for retired people. There is an article about over 60´s getting loans. Even if you are not, I reckon it is targeted at people on pensions, which you have said you are.