How to be certain that a personal credit offered by a broker does not hide a scam?
The dynamic credit market, coupled with the difficulties of some individuals, unfortunately favors some frauds by unscrupulous brokers. It is therefore strongly recommended to carry out due diligence before committing to ensure that the broker is confident and that the proposed solutions are sound.
Before entering this topic, please take this warning: don’t confuse the loan processing fees with the loan application upfront fees.
What are the 7 things to check the honesty of a loan broker?
- The copy of the contract
- Application fee
- The right of revocation
- Early repayment
- The interest rate and the repayment term
- Compulsory and optional insurance
- Work with an accredited broker
1. Copy of contract
It is very important that the broker give the client a copy of the contract. It is a mandatory document and you must always have an original copy signed by each party.
The financial institution with which the credit is subscribed, remunerates the broker by granting him a portion of the gain. In fact, the borrower should not pay a processing fee through a broker, since these fees are included in the credit rate. This is also one of the advantages of going through a broker: it simplifies the readability of offers, which thus become easier to compare.
3. The right of revocation
This is for the consumer, the possibility to retract after signing the contract. This solution protects consumers who sign a little too quickly, without fully considering the consequences of their commitment, or who would have been in a hurry to sign.
Your contract must mention the conditions of revocation, and the consumer must be notified. To date, the right of withdrawal of the consumer is applicable for 14 days following the signature.
It is advisable to systematically verify the presence of this right of revocation on the contract.
4. Early repayment
Consumers regularly want to repay their credit before it expires. This operation is possible, sometimes for a fee, sometimes free of any charge. This is the early repayment. A good broker should always inform you about the conditions of early repayment.
5. The interest rate and the repayment term
These are the basic features of a credit. This information must be clearly stated in the contract. In case of doubt or ambiguity, do not hesitate to approach a specialist to ensure credit conditions.
There must be also a clear specification of other costs, processing or recurring, added ofer the interest rate.
6. Mandatory and optional insurance
These insurances cover certain risks, for example, in the case of the death of the borrower. Only death insurance is mandatory, and its cost must be included in the proposed interest rate.
Other insurance is optional. If you decide to give up, make sure you can continue to honor your commitment if the risk arises. For example, in the case of unemployment insurance, check that you are still able to repay the credit with a 30% income drop.
7. Work with an accredited broker
Accreditation is an excellent guarantee of confidence. Good brokers are accredited by banks, however, there is unfortunately no centralized list. It sometimes happens that ill-intentioned brokers claim to be wrongfully accredited by a bank. The verification of this point is simple and fast: a phone call to the bank concerned is enough! This will prevent you from falling into the arms of an unscrupulous broker.
The benefits of going through a broker
The first advantage is undeniably the ability to access the products of several banks at a glance, and thus to choose the most appropriate solution for your needs. The broker can also quickly verify that your profile matches the anticipated banking institution, making sure that you meet the bank’s requirements. This is a very appreciable time saving.
The role of a broker is naturally to obtain the most advantageous conditions, especially on the credit rate. Through its network and the number of credits subscribed, the broker has a significant weight with the banks, which he makes benefit his customers.
In this case, the broker analyzes in detail your situation, and thanks to a large catalog of available products, he can propose very well adapted solutions, almost tailor-made. It also covers the administrative costs, avoiding many administrative procedures.