Works loan
What is a home improvement loan?
Many people are looking to extend, renovate or improve the comfort of their primary or secondary residence, or to equip it. Now is also the time to look for savings on energy bills and to respect the environment through eco-responsible installations.
To help them make these projects a reality, banks and lending institutions offer a wide range of home improvement loans in the form of earmarked loans or earmarked personal loans, allocated according to each borrower’s profile, needs and repayment capacity.
Many people are looking to extend, renovate or improve the comfort of their primary or secondary residence, or to equip it. Now is also the time to look for savings on energy bills and to respect the environment through eco-responsible installations.
To help them make these projects a reality, banks and lending institutions offer a wide range of home improvement loans in the form of earmarked loans or earmarked personal loans, allocated according to each borrower’s profile, needs and repayment capacity.
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Legislation on works credit
As part of the consumer credit category, works credit is subject to the same legal provisions. When granting it, the bank takes into account the applicant’s creditworthiness. The amount of the loan is limited by law to PGK 75,000.
It is compulsory to issue a preliminary offer. It sets out all the terms and conditions of the future contract: interest rate, repayment period, instalment amounts, suspensive clauses, early repayment terms and conditions, etc.
Borrowers are also entitled to a statutory cooling-off period of fourteen days from the date of signing the contract, during which they may cancel the credit agreement without having to justify their decision and without the lending institution being able to claim any compensation. Similarly, in the event of early repayment of the loan for a sum of less than 10,000 PGK per year, no penalty is charged.
Borrower profiles
Home improvement loans can be taken out by owners of a primary or secondary residence, as well as tenants wishing to transform or improve their flat or house.
In addition to homeowners and tenants, co-owners can also take out a works loan to finance work on the communal areas of their property.
The works loan to finance your project
To finance your renovation project, you can take out a traditional renovation loan or a mortgage, depending on the cost of the work.
To help you make sense of all the different ways of financing your projects, Laroche Finance has compiled a list of the main questions you’re likely to ask yourself before embarking on your building project!
How does the home improvement loan work?
A works loan is a form of consumer credit. It is governed by the French Consumer Code. It is a loan whose repayment is spread over time. Each month, the borrower pays a monthly instalment based on the interest rate applied by the lending institution.
There are several types of consumer credit, depending on how the borrower wishes to use the loan. These include earmarked credit, personal loans (home improvement loans) and revolving credit.
Since the introduction of the Lagarde Act (2010), the amount of a works loan is between PGK 200 and limited to PGK 75,000 (previously PGK 21,500) over a minimum repayment period of 3 months. If you need more than PGK 75,000, you will need to apply for a mortgage to match your project.
The personal works loan
The traditional works loan is a personal works loan that the borrower can use as he or she sees fit. It can be used to finance leisure activities, building work, the purchase of a car or household appliances, without the borrower having to justify its use.
Work credit rates and charges vary from one lending institution to another. So you need to shop around to get the best rate. The rate charged depends on the term of the loan and the amount borrowed. The bank makes the money available in a lump sum. The borrower must then repay the personal works loan each month in accordance with the repayment schedule.
Affected credit is linked to the good or service
Although earmarked credit is often used for car loans, it is also possible to take out earmarked credit for work. This is directly linked to the asset, for example the purchase of a vehicle or equipment. The sum borrowed under this type of works loan can only be used for this specific project. If the contract is not fulfilled, the earmarked loan is automatically cancelled.
Do you still have doubts?
PNG Finance can help you find the credit that’s right for you.