Swim in the sea, enjoy the good weather, drink cocktails on the edge of the swimming pool of a luxury hotel … All this is very nice and useful, but all that comes at a price. Due to lack of means, more and more households are paying for their summer holidays via a consumer credit. Are they right to go into debt to finance family trips? The answer in the following paragraphs.
A common practice, but dangerous for some
According to a study by Loanforus and Creditinbank, French families have roughly a budget of € 1,506 for their summer holidays. However, this figure is equivalent to one month’s salary for the majority of workers located in France. Each year, nearly 66% of French households move to enjoy the arrival of summer. The share of households borrowing to travel is 10%. These are those who do not receive help from their EC, employer or family.
Subscribing a consumer credit is a fairly common stock and as the rates are at their lowest, this is not likely to change. Does this mean that it is interesting to take out a loan to spend a week at the beach? It all depends on the amount granted, the purchasing power of the borrower and the type of credit.
This significant drop is, for example, disadvantageous for those who ask for small amounts. In addition, the consumer will have to avoid signing a revolving credit agreement if he wants to ensure the sustainability of his financial situation. Indeed, this kind of loan is quite expensive even if it is granted without presentation of proof of use. If you still want to take out a revolving loan, consider simulating the sites of financial institutions.
Consumer credit: the risks incurred by the borrower
Do not be fooled by historically low rates, the price of credit is not just about interest. Above all, if you borrow an amount greater than 4000 euros. Before signing a credit agreement to finance your holiday, take the time to read the clauses of the latter.
According to the representative of the Association Croesus which works against the over-indebtedness, it is important to make sure to be able to repay one’s holiday loan in one year. Because, the longer the repayment period, the more the borrower will have difficulty in settling his debts. Knowing that he will wish, the following year, to contract a new credit to go on a trip again. This can give rise to a vicious circle.
On the other hand, borrowers must also consider the fact that after the summer holidays, there is back to school. An event that generates many large expenses. In addition, they will also be required to pay their local taxes during the same period. In order not to end up in economic distress, it is strongly advised to make a smart loan.