The European Union has standardized the credit market, laying the foundations for free competition. A European can legally apply for credit in another EU country. For an individual, there is interest in knowing the interest rates practiced in Europe, in order to obtain the best offer.
How to apply for credit in another country of the European Union?
From directive to directive, Europe, or more precisely, the European Union, continues to harmonize the different economies that make it up. More and more, we can do business in the EU, especially since the advent of the Schengen Area and the Euro.
But unfortunately there are still too many differences between EU countries, including differences in laws, but especially taxes and economic power. These differences do not allow today for all countries to play on the same level of competition: one country will have a cheaper labor force, another will have less tax.
When looking for good credit outside France, there are two aspects to take into account. The first is the understanding of the language. It is difficult for a Frenchman who speaks no other than French to go to a bank abroad to make a loan. The second, physical proximity: to get credit, you have to go to the bank.
In France, many banks are fighting to present the best interest rate to their customers, which allows France to be among the best European countries in terms of credit. It’s not for nothing if BNP-Paribas is one of the largest European institutions for consumer credit ! All about credit scoring and rating
Example of interest rates in Europe for a consumer credit
France is a very competitive country in terms of credit. It has the maximum rating of rating agencies, and is a country with a very strong bargaining power, given its economic weight. In addition, the banking sector is competitive, with several banks operating on the French market. As you say right now: it is difficult to find a better place elsewhere, at the credit level, at least in 2017.
In June 2017, we looked at what we could expect in terms of credit. By taking the same company, Yoabank, and by looking at the different rates that it practices in its different countries of implantation. So we did a credit simulation, a classic personal loan: we want 3000 euros, to repay over 12 months. In 12 months, if you pay a zero rate credit, you have to pay 3000/12, which is 250 euros.
- Belgium : it is proposed to repay 266.31 euros per month. The APR is 12.50%.
- Spain : it is proposed to repay 269.35 euros per month. The TAE is 14.92%. Despite the European directive, no TAEG posted.
- Portugal : it is proposed to repay monthly 270,56 euros. The APR is 13%.
- France : for a credit of 3000 euros to be reimbursed over 12 months, Yoabank offers monthly payments of 259 euros. Unbeatable. Except that this first offer corresponds to a revolving credit, with adjustable rate. A revolving credit, the normal rate excluding promotion, it is rather around 20%. To get the true proposal equivalent to other countries, I had to choose a personal loan: 269.45 euros with a APR of 15%.
As we can see, the interest for a Frenchman to make a credit elsewhere in Europe is minimal: it is not for the best rate that we will see abroad, but rather to try to obtain credit more easily.. We did this research in September 2010, and it is clear that the situation has changed little. The differences between countries are even smaller.
Filed at the Francia Bank
A file at the Bank of France, FCC or FICP will have a hard time getting credit. It is not totally impossible if he puts a property in mortgage. It is for this reason that the temptation to go to the country next door if you lend money to the FICP is strong. Many border workers think about it, and rightly! As a general rule, it is better to ask for a mortgage to his bank, the one where our income is. Other EU countries are no less lax than France in terms of credit. The hope lies mainly in the fact that foreign banks would not consult the files of the Francia Bank.
But precisely because of this state of affairs, foreign banks have great difficulty in lending to a foreigner! Unless there are strong guarantees, it is now practically impossible to obtain credit in an EU country other than one’s own. The case changes a little figure for border workers, those who work on one side of the border, but live on the other. In many cases, their income is fixed on a bank account in the country where they work. In this case, the bank can lend money: it knows its client well. To obtain credit abroad, you must either live there or work there, the only way for a bank to have confidence in its client.
Many of these banks may be branches of French banks, or have a partnership, which allows them to exchange information about their customers. the article “credit abroad”. In addition, it may be more interesting to take advantage of zero-rate loans or the tax credit to which one might have the right in France, something impossible if one asks for a credit elsewhere in the EU. The problem does not arise if you live abroad and work there, of course.
Many foreign banks, to help their internal real estate market and to attract new customers, offer specific home loans for foreigners wishing to buy a house, an apartment in their country. France is doing this too, and is targeting specific nationalities. The bank must be used to working with the country of origin of the applicant.
On the other hand, if you approach an Italian bank to buy a house in France, the task is much more complicated, not to say impossible. It is important to understand that foreign banks have trouble following a purchase outside their national territory: the taking of collateral is much more complex, the laws of one country to another change, and the banking agency does not know not necessarily all the legal subtleties of the other country. The EU, unlike consumer credit, has not yet harmonized mortgage lending in Europe.
To learn more, read our article on credit to buy a house in Portugal
If you have no business (work, usual place of residence), as much as it is an impossible mission to obtain a loan to buy in France, but the situation is changing, with the EU pushing to harmonize the credit market, and money in general.
All about revolving credit
- Beware of credit scams
With the EU, it becomes possible to make a loan in another member country.
The European Union today allows any European citizen to move freely in the member countries, to settle there, to work there. With the end of the borders, it is quite possible to buy abroad, and to compete between the different offers that can be found in each country.
It is thus possible to make a consumer credit throughout the EU. Real estate credit, by its complexity, is not there yet, but the EU works so that more and more capital can flow freely, with the removal of the various obstacles that could prevent it: taxes, laws, Informatic Systems…
Thus, the EU tends to unify economically the different member states, but there is still a way to go before being able to freely credit anywhere in Europe.