The loan between individuals works in the same way as a traditional credit but without bankers. We explain how it works…
How loans between individuals work
Also called community credit or “Peer to Peer”, the loan between individuals works in the same way as a loan from a banking establishment.
The lender allocates a defined sum to the borrower and the latter reimburses it in monthly installments with a more or less low interest rate and defined by both parties.
The loan between individuals is particularly interesting for people who cannot take out credit from banking organizations. However, to avoid abuses, there are rules that govern this type of loan like conventional loan contracts. It is good to be aware of it before starting.
Consolidation of credits can be an alternative
If the solution of the loan between individuals cannot be implemented, the repurchase of credit can be envisaged if you need a personal loan of money. The repurchase of credit makes it possible to consolidate your various loans in progress only one and to request an unallocated additional cash.
It is possible, on a case-by-case basis after examination of the file, to integrate a loan between individuals into a repurchase of credit . The bank that takes over all the credits will ask for supporting documents (acknowledgment of debt, loan contract).
Who can lend money?
All adults with a bank account in France can become a private lender. This is why you have to be very careful when using an anonymous private lender because there is a risk of falling on a dishonest person*. Guarantees and supporting documents must be requested.
Several types of loan between individuals: family loan, between friends, microcredit, peer to peer loan offer…
The family loan or between friends
A family member or friend may decide to take out a cash loan to help out a loved one in a difficult financial situation. It is possible to write a loan contract or an acknowledgment of debt which indicates the amount of the sum lent, the duration, the dates of repayment and the interest rate if there is one…
Solidarity loan or peer to peer
This system is developing more and more on the internet. The loan between individuals is obtained mainly by companies on the Internet called the “Pure Players” which play the role of intermediary between applicants and lenders. The best known is Younited Crédit , companies that collect loan funds from professional investors (natural or legal persons, companies, pension funds, insurers, etc.).
These companies are generally approved by the Prudential Control and Resolution Authority (ACPR) to carry out this type of financing. The borrower will have to provide guarantees (most often proof of address, an employment contract and an identity document) and the intermediary organization is responsible for setting up the contract between the two individuals.
Microcredit is an alternative to traditional bank credit . There are two kinds: professional or social microcredit, the first being more aimed at entrepreneurs, the second favors more the social and professional integration of individuals by supporting personal projects, financing specific needs (purchase of a car, work, need for a professional investment, etc. In addition to obtaining credit, the borrower is supported by the association or structure granting the credit.
Ceiling: how much can you lend?
A loan of a sum of money between individuals does not have limits as to the maximum amount of a loan. Its limit is therefore based on the maximum amount that the lender can afford to lend as well as the borrower’s ability to repay the loan. The amount, duration and interest rate of the loan are negotiated between the two parties, and although the criteria are not as strict as the banks, the lender will not offer you a loan higher than 800€ if your salary is of 1200€, he will take into account your potential rent and your charges to ensure that you are able to repay.
Mandatory and reassuring formalities for the lender
In the case of a loan between individuals, a certain formalism also exists. The interest rate of this credit must not exceed the rate of wear . It is recommended to make an acknowledgment of debt or a loan contract.
The acknowledgment of debt is written on free paper by the borrower himself by hand. It must include the date of the loan, the amount of the debt in figures and in words as well as the signature of the borrower. The original is to be kept by the lender.
The other possibility is to draw up a loan contract in duplicate, dated and signed by both parties. Everyone keeps a copy.
These documents can be deeds under private seal (made between individuals) or before a notary (notarial deed). For the latter case, you will have to pay a fee.
Beware of internet scammers*
The number of complaints filed for fraud increased by 7% in May 2022 according to the monthly report given by the Ministerial Statistical Service for Homeland Security (SSMSI). The fake credit scam between individuals on the internet is very developed. Under cover of doing a favor, a scammer offers loans online via social networks to people who are unable to obtain one from a traditional bank. After exchanging emails, the scammer recovers personal data which he reuses (he then usurps the identity of the person by opening bank accounts for example) or asks for a little money to prove his good faith or to the filing fee.
It is therefore necessary to remain very vigilant, not to transmit any sum of money or document to an unknown person and to be wary of offers that seem too attractive (rates that are too low). When sending documents, remember to annotate it by hand or cross it out with a large line, it will be unusable for scammers. It is also possible to file a complaint on the THESEE platform dedicated to e-scams, open to the general public since March 15, 2022.