Overcoming financial difficulties: what are the solutions?

Warning: borrowing money also costs money

Personal loan, cash reserve: what’s the difference?

Personal loan (instalment loan): you repay the full amount

Personal loans are instalment loans. When you apply for your loan, you determine in advance, with the bank, how much you can borrow, what is the term of the loan, and how much you will repay monthly. At the end of the contract, you will have repaid your loan in full, including both the principal amount and the interest accrued.

Cash reserve: you only pay if you use it

A cash reserve is a line of credit or credit opening. Your bank or any other financial institution will make a certain amount available to you through an account or a bank card, which you can use as you wish. You dip into this reserve as and when the need arises. Usually, there is no time limit for using it. When you draw on this cash reserve, you repay part of the amount you borrowed and the interest. By law, the outstanding balance must go back to zero on a regular basis.

Personal loans are instalment loans

What is a personal loan?

Also known as an instalment loan, a personal loan is a credit contract for a specific sum of money. Banks or financial institutions lend you an amount for a specified time so you can purchase goods or services. There are personal loans with no defined purpose – you can finance anything you want. The funds are deposited into your account, and you can use them as you wish although you must, of course, pay the monthly instalments. Other personal loans have a specific purpose, which is specified at the time of application The borrowed money is sometimes paid directly to the seller, instead of into your account.

You generally repay part of the borrowed amount plus interest on a fixed date every month. The duration of the instalment loan is limited by law and varies according to the amount borrowed. Good to know: these loans sometimes have different names depending on their purpose. Examples include a renovation loan or an energy loan.

Personal loan: how much can you borrow?

You can use a personal loan to finance your projects. You determine the amount you want to borrow, the term of the contract, and the monthly payments, including the capital and interest. By choosing a personal loan, you can complete your projects while keeping your budget in check. Before granting you a personal loan, the bank will examine your situation and your ability to repay it. It will also ask you what you intend to use the money for. But you won't be required to provide invoices after you receive a loan. You should also know that in many cases, you can adjust your monthly payments and even repay your loan early.

A cash reserve is a credit line or credit opening

Credit line or credit opening: explanation

Temporary unemployment, unexpected expenses, or illness... At some point, you may find yourself facing an unexpected financial challenge. In such situations, having a cash reserve to draw upon can be helpful. One option is to request a credit opening or cash reserve from your bank. However, this is only possible if you have the necessary financial resources and stability to do so. Following a thorough analysis of your current financial situation and needs, the bank can offer a tailored solution that complies with the principles of responsible consumer credit lending. The bank must adhere to the credit rules set by the National Bank and the European Central Bank for each loan granted.

Credit opening: several possibilities

Our bank offers a cash reserve facility that can be made available to you in several ways: 

1. A cash reserve can be set up in your current account, also known as an arranged overdraft. 
2. A cash reserve can be linked to a payment card. 
3. A cash reserve can be tied to a credit card. 

All of these options have been specifically designed to enable you to borrow money up to a predetermined maximum amount on a temporary basis, allowing you to cover unexpected or temporary expenses. The three options are adapted to your budget, needs, and ability to repay. You only pay interest on the amounts you have drawn from your cash reserve.

A personal loan or a cash reserve?

Personal loan: who is it for and why?

Consider the following scenario: if you need cash to pay bills, finance energy-efficient home renovations, or purchase a new sofa for your living room, a personal loan could be a suitable option. With an instalment loan, you can borrow a specific amount to cover all your expenses, with a repayment term and monthly instalment that fit your budget. The loan details, including the monthly payments and repayment schedule, are defined in advance, providing you with a clear plan for managing your debt.

Cash reserve: who is it for and why?

With a cash reserve, a specific sum of money is made available to you, which you are free to use in full, in part, or not at all. So, this is different from an instalment loan. If, for example, you dip into this reserve to book your next holiday, you could decide to repay this amount in one go, or in instalments. You only pay interest on the amount you use; no interest is owed if you don't use your cash reserve. Remember that by law the outstanding balance must go back to zero on a regular basis.

 

Legal information

Loan type: credit facility. The provisions of the Consumer Credit Act, Chapter 1, Title 4, Book VII of the Economic Law Code apply. Subject to acceptance of your application. Lender: BNP Paribas Fortis SA, Montagne du Parc 3, 1000 Brussels – RPM Brussels – VAT BE 0403.199.702.

Instalment loan. The provisions relating to consumer credit in Chapter 1 of Title 4 of Book VII of the Economic Law Code apply. Subject to acceptance of your application by Alpha Credit SA, lender, Montagne du Parc 8 Box 3, 1000 Brussels – RPM Brussels – VAT BE 0445.781.316. Tied agent: BNP Paribas Fortis SA, Montagne du Parc 3, 1000 Brussels – RPM Brussels – VAT BE 0403.199.702.