New consumer credit rules in France are pushing people to rethink long-term financing for major life projects, beyond traditional loans and mortgages.
New credit rules take effect
On 20 November, new rules will come into effect to strengthen the regulation of consumer credit, including small loans and installment payments. This development has prompted discussions on how individuals might rethink their approach to financing major life projects.Traditional French approach to loans
For decades, French people have followed a nearly unchanging logic: a small need, a consumer loan; the purchase of a home, a mortgage over twenty or twenty-five years. Between these two, however, there exists an entire world of projects that these two reflexes do not always allow to be financed under the best conditions.Major life expenses and financing
Education for children, major home renovations, family support, professional projects... These expenses can represent several tens of thousands, or even hundreds of thousands, of euros. Yet, they are often addressed separately: one loan today, another tomorrow, and potentially a third. By financing each project individually, one ends up accumulating monthly payments rather than organizing finances.Long-term financing example
What if we also considered financing our lives over the long term? Let's take a simple example. Two loans of 50,000 euros over five years, at a hypothetical rate of 6 percent, represent nearly 1,933 euros of cumulative monthly payments. A financing of 100,000 euros over twenty years, at the same rate, would bring this burden down to about 716 euros per month.New financing approaches
We find it perfectly natural to borrow over twenty-five years to buy our home. Why not consider, when the amounts justify it, a similar logic to finance certain major projects in our lives? It is precisely in this space that new approaches to asset financing are emerging, such as the Prêt Libre Patrimoine (PLP).Benefits of long-term financing
By mobilizing part of the value of their property without having to sell it, some property owners can access a non-designated cash reserve, repayable over a period that can go up to twenty-five years. The interest goes beyond merely financing an expense. It is also about anticipating, preparing for several projects, having a comfort fund, and maintaining the freedom to make choices over the years, rather than systematically seeking a new loan when a need arises.Considerations for long-term loans
Of course, borrowing for a longer period does not mean borrowing better in all situations. The overall cost, the ability to repay, and the risk represented by a mortgage guarantee must be carefully assessed. However, between the accumulation of short-term loans and the sale of a real estate asset, other options deserve to be considered today.Expanding financial thinking
As we rightly strengthen consumer protection against credit, it is time to also expand our way of thinking about financing. Real estate assets should not only serve to house and then to pass on. Under certain conditions, they can also become a lever to support the major projects of life.Balancing today and tomorrow
Because managing one's budget is not only about knowing how to finance today's expenses. It is also about providing the means to prepare for tomorrow's expenses.
