A personal loan is a sum of money lent by a bank or a specialist lender, which the borrower agrees to repay within an agreed period, paying interest. Personal loans in France are tightly regulated by law, whether you are financing a car, home improvements or a home purchase.
This guide explains the different types of credit and how personal loans work, how to read the true cost of borrowing, the protections you are entitled to and the new rules that apply from November 20, 2026. It also details the habits to adopt to borrow without getting into difficulty.
What Is a Personal Loan? Definition
Legally, a personal loan is a contract under which a lender makes a sum of money available to a borrower, who repays it on a set schedule. The price of this service is interest, to which various fees may be added: processing fees, insurance, guarantees. Repayment is most often made in monthly installments that include a share of capital and a share of interest.
Two broad categories apply to individuals:
- Consumer credit, which finances non-property goods and services: a car, equipment, home improvements, travel, education.
- Mortgage credit, which finances the purchase, construction or renovation of a home, over much longer terms.
Each follows its own specific rules under the French Consumer Code. Businesses, for their part, have dedicated financing options (business loans, leasing, corporate overdrafts) that do not fall under these protections.
Amortizing Loans and Revolving Credit
An amortizing loan sets an amount, a term and monthly payments fixed from the outset: each payment reduces the outstanding capital down to zero. A revolving credit facility gives you access to a reserve of money that replenishes as you repay it. It is more flexible, but also more expensive and riskier, because it can sustain debt over the long term.
The Main Types of Consumer Credit in France
The French Ministry of Economics and Finance lists several forms of consumer credit. Under the current rules, they cover amounts between €200 and €75,000.
| Type of credit | Use of funds | Rate | Key features |
|---|---|---|---|
| Allocated loan | Only the purchase specified in the contract | Fixed | Tied to the sale: if the purchase is cancelled, so is the loan |
| Personal loan | Free to use, with no proof of purchase required | Fixed | Monthly payments and term known in advance |
| Revolving credit | A reusable reserve of money | Variable, higher | Repayment period capped by law |
| Hire purchase with option to buy (LOA) | Use of an asset in exchange for monthly payments | Included in the payments | Option to buy at the end of the contract, often for a car |
| Personal microcredit | Social inclusion project (employment, mobility, health) | Low | Support from a non-profit or a municipal social action centre (CCAS) |
| State-guaranteed student loan | Financing your studies | Set by the bank | For those under 28, repayment can be deferred |
Allocated Loans (Point-of-Sale Credit)
Usually offered at the point of sale, an allocated loan finances one specific good or service, stated in the offer. Its advantage is the legal link with the purchase: if the goods are not delivered, the credit is cancelled, and repayments only begin on delivery.
The Personal Loan
This is the most classic form of consumer credit. You use the money as you wish, without having to justify the purchase. The rate is fixed and the monthly payments are known from the moment you sign, which makes budgeting easier.
Revolving Credit: Personal Loan vs Credit Card Borrowing
Often attached to a store card, where it works much like a credit card credit line, revolving credit, also known as “revolving”, was for a long time a major cause of over-indebtedness. The law has therefore tightly restricted it. Above €1,000, the lender must also offer you an amortizing loan alongside it. The repayment period is capped at 36 months for amounts up to €3,000 and 60 months above that. Its rate is variable and generally higher than that of a personal loan.
Hire Purchase (LOA) and Long-Term Leasing
Hire purchase with an option to buy lets you use an asset, most often a vehicle, in exchange for monthly payments, with the option to purchase it at the end of the contract. Long-term leasing (LLD), which includes no purchase option, is not legally a credit agreement. In both cases, compare the total cost of the payments with that of a purchase financed by a standard loan.
Mortgages in France: How They Work and the Rules
Mortgage credit finances the purchase of a home, its construction or major renovation work. It involves large amounts and long terms, often between 15 and 25 years. It is almost always accompanied by a guarantee (a mortgage on the property, a lender’s privilege or a guarantee from a specialist body) and borrower insurance, which banks require in practice.
Lending Criteria Set by the HCSF
Since 2022, a standard set by the Haut Conseil de stabilité financière (the French High Council for Financial Stability) has applied to banks. The debt-to-income ratio — the share of income devoted to repaying all credits, insurance included — must not exceed 35%. The term of the loan is in principle limited to 25 years, with tolerance up to 27 years in certain construction or renovation cases. Banks have a limited derogation margin, reserved as a priority for main residences and first-time buyers.
The calculation of your borrowing capacity takes stable income and existing commitments into account and, for an investor, part of the expected rental income. We cover this point in our article on how rental income is counted in your borrowing capacity.
Protections Specific to Mortgages
- The loan offer is sent in writing and remains valid for at least 30 days.
- The borrower has a 10-day cooling-off period: the offer cannot be accepted before the eleventh day after it is received.
- If the loan is not granted, the property purchase is cancelled thanks to the suspensive condition of obtaining the loan written into the preliminary sale agreement.
- Since the Lemoine law of 2022, borrower insurance can be cancelled at any time and replaced with an equivalent policy. The health questionnaire is abolished for loans whose insured amount does not exceed €200,000 per person and that end before the borrower turns 60.
Loan Interest Rates: APR, Total Cost and the Usury Cap
APR: The Figure to Compare
The annual percentage rate of charge (APR, known in France as the TAEG) combines the nominal interest rate and all mandatory fees: processing fees, insurance where required, and guarantee costs. It is the only indicator that lets you compare two offers honestly. It must appear on any advertised figures and on the credit offer. Two loans at the same nominal rate can show very different APRs depending on their ancillary fees.
The Total Cost of the Loan
The total cost is the sum of everything you will pay on top of the capital borrowed. It depends on the rate and above all on the term: stretching out repayment lowers the monthly payment, but sharply increases the total interest. Always compare the total amount due, not just the monthly payment.
A simple example illustrates the effect of the term. For the same loan at the same rate, moving from three to five years of repayment cuts the monthly payment by about a third. But the interest paid in total rises by more than half. A low monthly payment therefore comes at a price.
The Usury Cap: A Legal Ceiling
No credit may be granted at an APR above the usury cap (taux d’usure). This ceiling is calculated and published every quarter by the Banque de France, by loan category and amount band. It protects borrowers against abusive rates. To check the thresholds in force, consult the Banque de France’s quarterly publication rather than an outdated figure.
Your Protections as a Borrower
The French Consumer Code provides several safeguards for any consumer credit agreement:
- Pre-contractual information: before any signature, the lender must provide a standardized information sheet describing the loan, its features and its cost.
- An offer held open for 15 days: the proposed terms remain valid for this period, giving you time to compare.
- A check of your creditworthiness: the lender must assess your repayment capacity and consult the Banque de France’s repayment incident file (FICP).
- A 14-calendar-day right of withdrawal after acceptance, using the form attached to the contract. Funds cannot be released during the first seven days.
- Early repayment: you can repay all or part of the credit before the end of the term. Limited compensation may apply depending on the amount and the type of loan.
No US-Style Credit Score in France
A great deal of content translated from English refers to a “credit score” or a “credit report” that you can check and improve. No such system exists in France. Each bank applies its own analysis: income, job stability, existing commitments, savings, how the account is managed. The only shared file is the FICP, which lists proven repayment incidents and over-indebtedness proceedings. A FICP listing makes access to new credit very difficult for as long as it lasts.
What Changes from November 20, 2026
An ordonnance (a French government decree) of September 3, 2025 transposes the new European directive on consumer credit. The new rules apply to contracts signed from November 20, 2026. According to the Ministry of Economics and Finance, the main changes are as follows:
- A wider scope: mini-loans, split payments (buy now, pay later), credits of less than three months and credits up to €100,000 all enter the protective regime of consumer credit.
- Stronger disclosure obligations to make offers more transparent.
- Mandatory tailored measures: before any litigation, lenders will have to propose solutions to borrowers in difficulty.
Existing credit agreements are not affected, except open-ended ones such as some revolving credits or overdrafts, to which part of the new rules applies automatically. Split payment schemes, often presented as a simple payment service, will therefore be better regulated.
How to Get a Personal Loan in France: A 6-Step Method
- Define the real need: a precise amount, a reasonable term, and check whether funding from savings is an option.
- Calculate your repayment capacity: the monthly payment must remain affordable even if the unexpected happens, taking all existing credits into account.
- Choose the right type of credit: a personal loan or an allocated loan rather than revolving credit for a one-off purchase.
- Compare APRs and the total cost of several offers, from your bank and from specialist lenders.
- Examine borrower insurance: it is not always mandatory for consumer credit, and for a mortgage you can choose a different insurer.
- Read the offer in full and use the withdrawal period if a better option comes along.
So-called “free” credit, offered by some sellers, lets you pay in installments without interest. Simply check that the total of the installments matches the advertised price and that no ancillary fees are added.
Credit, Savings and Investing: Making the Right Trade-Off
Credit is neither good nor bad in itself: everything depends on what it finances. Borrowing to acquire your main home or a rental property can help you build wealth. Borrowing to fund everyday spending, on the other hand, makes you pay interest on consumption that earns nothing.
Before going into debt for a consumer purchase, it is better to ask whether dedicated savings could let you wait a few months. It is generally not rational to hold low-yielding savings while paying for an expensive revolving credit. For an overall strategy, our method for building wealth step by step explains how to combine budgeting, an emergency fund, repaying expensive debt and investing.
Some savers use their life insurance policy as an alternative: an advance on the policy provides cash without closing the investment, or the policy can serve as collateral for a loan. These solutions carry a cost and specific conditions, which should be compared with a standard loan.
What to Do If You Struggle to Repay
Acting early is essential. At the first sign of difficulty, contact your lender: it can offer a payment deferral, a longer term, a temporary suspension or a renegotiation. In the event of a payment default, it must inform you of the risks you face before starting proceedings.
- Borrower insurance can cover all or part of the installments if your policy covers the cause of your difficulties, such as disability or, depending on the guarantees purchased, job loss.
- A grace period: the judge of the local court (tribunal judiciaire) can suspend or postpone your repayments for up to two years, without penalties.
- Loan consolidation combines several loans into one, with a lower monthly payment but often a longer term and a higher total cost. It only makes sense after a precise calculation.
- The over-indebtedness procedure: if your debts durably exceed your repayment capacity, you can apply free of charge to the Banque de France’s over-indebtedness commission.
Beware of “no-questions-asked” credit offers or intermediaries that demand fees before the funds are released: these are classic signs of a scam. Check that a lender is authorized in the REGAFI register, or in the ORIAS register for intermediaries.
Loans Between Individuals
Borrowing from a relative is legal, provided you can prove that it is a loan and not a gift. A written loan acknowledgement (reconnaissance de dette) is strongly recommended. Above €5,000, the loan must be declared to the tax authorities. Any interest paid counts as taxable income for the lender. This type of loan avoids bank fees, but it can strain family relationships if repayment is late.
Borrowing Mistakes to Avoid
- Looking only at the monthly payment, forgetting the term and the total cost.
- Stacking several consumer credits, especially revolving ones, until you lose track of your debt.
- Accepting the first offer without comparing APRs.
- Using split payments for everyday spending, which amounts to living on credit.
- Borrowing to invest in the stock market or crypto-assets: a market downturn leaves the debt intact while the investment has lost value.
- Waiting too long before reporting difficulties to your lender.
FAQ: Your Questions About Personal Loans and Credit
What Is the Difference Between Credit and a Loan?
In everyday language, the two terms are equivalent. Legally, credit is a broader concept that covers the loan, the authorized overdraft, the revolving reserve and hire purchase with an option to buy.
How Long Do You Have to Withdraw from a Consumer Credit Agreement?
You have 14 calendar days from acceptance of the offer, by returning the withdrawal form set out in the contract. For an allocated loan where immediate delivery is requested, this period can be shortened, but never below three days.
Are APR and Loan Interest Rates the Same Thing?
No. The nominal interest rate covers interest only. The APR adds all mandatory fees, such as processing fees or required insurance. It is the APR you should compare between two offers.
How Much Can You Borrow for a Property Purchase?
It depends on your income, your commitments and the term of the loan. Banks apply the HCSF rule: a maximum debt-to-income ratio of 35% of income, insurance included, over a term of at most 25 years, except for limited derogations.
Can You Repay a Personal Loan Early?
Yes, at any time, in full or in part. Early repayment compensation may apply, within limits set by law depending on the type of credit.
What Should You Do If You Can No Longer Repay?
Contact your lender immediately to negotiate an adjustment. You can also ask the judge for a grace period or, in the event of over-indebtedness, file a free application with the Banque de France.
Sources: Ministry of Economics and Finance, “Tout savoir sur le crédit à la consommation” (information sheet updated for the rules applicable from November 20, 2026); French Consumer Code; Haut Conseil de stabilité financière; Banque de France. This article is for educational purposes only and does not constitute personalized advice. A credit commits you and must be repaid: check your repayment capacity before you commit.