Taking out a loan today is made very easy for you. But there is a danger that you will no longer be aware of the risks involved when you hurry to take out a loan. In this article we explain exactly what you should pay attention to. By keeping this information, you choose a responsible and cheap loan.
Before you actually start comparing the loans, there is a lot of preliminary research you can do. You will have to find out, among other things, which type of loan suits your situation, which is the most interesting term of the loan. And what the costs will be in the long term and whether you can continue to pay them for so long or whether the financial situation may change in a few years.
Types of loans
The first question you ask yourself when you plan to take out a loan is which type of loan best suits your situation. We briefly describe the types of loans that are available and when they might be suitable for you. If you want to know more about this, read: What is the best loan?
This is the most flexible form of borrowing. You set a credit limit together with the lender. This is the maximum amount that you can borrow. When you withdraw an amount and how large that amount is, it’s up to you. Does it appear that you later need the money that you have repaid? Then you can record it again. The interest rate is variable with a revolving credit. This means that it can rise and fall during the term. It is impossible to say in advance when the loan will be repaid. This is because you can continue to withdraw money again and again.
This loan is mainly chosen by people who temporarily want some extra financial space. For example, think of someone who wants to renovate his house now, before expensive repairs arrive. But a revolving credit can also be a temporary solution for furnishing the baby room or studying children. You have the money in hand for the moments that you really need it, without having to take out a separate loan for this each time. Remember that everything you borrow must also be repaid.
The personal loan is one where everything is fixed in advance. For example, it is known in advance what amount you are going to borrow and you will receive this in one go to your account. You then repay a fixed amount each month. Because the interest is also fixed with a personal loan, it is known in advance exactly how high the amount that you will repay each month. This way you can also calculate when you will have repaid the loan in full. Today, the interest on a personal loan is slightly lower than on a revolving credit.
This loan is suitable for anyone who wants to borrow a one-off amount and also has the certainty to repay it within a certain time. The personal loan is often used when purchasing a new car. By being able to pay immediately, the car immediately becomes property, with the associated benefits. In addition, it can also be a good solution to purchase products with a certain lifespan, such as a new washing machine or computer. Keep in mind that you always keep the duration of the loan shorter than the lifetime of the product. This prevents you from paying for something that has already been debited or that you no longer use.
In some cases, lenders choose not to offer you a revolving credit or personal loan. A negative BKR registration is often the cause of this. You get a negative BKR registration by failing to meet your payment obligations several times and despite reminders. But luckily there is still a loan that you are entitled to, the mini loan. This can be applied for for anyone over the age of 18, living in the Netherlands and not receiving benefits.
The mini loan is designed for those who want to borrow a small amount for a short time. You borrow up to 1500 euros and pay it back within a few months. The interest rate charged for a mini-loan may not legally exceed 14%. When applying for a mini loan, make sure that you are dealing with a reliable lender. There are also a number who operate from abroad and thus circumvent Dutch law and still ask too much money. Reliable mini credit providers are Ferratum and Saldodipje.
Most interesting duration
The term of a loan is the time in months that you take to fully repay the loan. This depends on the amount you borrow, the monthly installment and the interest. In the case of a revolving credit, it also depends on the number of re-drawings that you make, as this extends the term. The minimum duration of a personal loan is 12 months and the maximum duration is 120 months. In the case of a revolving credit, there is no maximum duration because re-drawings always remain possible.
The term of the loan must match the purpose for which you take out the loan. But how do you determine a reasonable duration? You do this by aligning it as accurately as possible with the life of the product or service that you purchase with the loan. Imagine taking out a loan for the purchase of a new car. Then you want to prevent that you are still paying off the loan while the car no longer passed the inspection after a few years and you had to give it away. Have the duration match the life of the product or let it be a little shorter. If you can redeem more per month, you can choose to shorten the term slightly, so that you exclude the risk of paying for the product that you no longer use. In addition, the costs for the loan will ultimately also be lower, because you pay interest in a shorter period of time.
If you opt for a personal loan, it is easy to calculate in advance how much you will spend on interest and repayment per month. If you opt for a revolving credit, this is a bit more difficult due to the freedom you have in that area. If we look at the personal loan, it is good to check before you take out whether you can continue to pay the amount to be repaid for the duration of the loan. Is it true that you will retire in the coming years or is it not certain that your contract will be extended? Calculate therefore whether you can continue to pay off the loan when there is less financial room in the future. In this way you prevent payment arrears and the chance of a negative BKR registration.
Only relying on the lowest interest rates is a common mistake. People forget to look at the conditions. Sometimes you are required to take out insurance with regard to a death risk. This premium plus associated interest may be higher than the interest rate of a loan in which it is already included. Also useful to check in advance is whether or not you can partially repay without penalty. Many consumers like the idea that there is the possibility of extra repayments and that this can be done without penalty.
Possible tax benefit
Do you borrow the money for the renovation or improvement of your home? In that case, the interest is deductible in the case of a personal loan. For that you must meet the conditions of the Tax Authorities. The money will, for example, have to be declared as ‘home acquisition debt’.
Read reviews while comparing
You will often hear how important it is to compare different loans and lenders. In addition, it can also help to read reviews from people who have taken out the same loan with the lender in question as you intend. Are they satisfied with the way the loan was granted? And what is the customer service in case you have questions or something is wrong? By reading the reviews you get honest answers from consumers like you and me.
Take out a loan
After you have done some preliminary research, you will have a number of favorite loans in front of you. Now it comes down to checking the lenders with interesting loans separately for, among other things, whether they are licensed, do not charge brokerage fees and do not force home visits.
Permit from the AFM or DNB
All lenders operating in the Netherlands are required to apply for a license from Bankate or the Netherlands Authority for the Financial Markets (AFM). To obtain a license, a lender must meet a number of requirements. In this way the company is tested for reliability and availability. This is not the only thing, they also have to comply with a large number of legal requirements. Once a license has been granted, it is entered in a license register. If they do not receive the permit, they may not carry out any activity related to the granting of a loan.
Mediation costs and insurance advice
If you see on your invoice that mediation costs are charged, do not fall for this. An advisor is paid by the bank for possible loan brokerage. Charging costs for this or for transferring a loan is prohibited. Receiving insurance advice is not mandatory. If this is offered by the lender, consider carefully whether you really need it. They may charge costs for insurance advice. But you have the full right to refuse this advice.
Visit at home or telephone approach
A visit to your home can be offered as an extra service. This sounds interesting, but don’t be tempted by it. Many people are more likely to sign a loan when someone comes home specifically for it. That is exactly the approach of this ‘free extra service’. The same applies to telephone contact with a consultant or a call center. It is said that they can lower your monthly costs when you refinance your loan or take out additional loans. Unfortunately, this does not apply in most cases.
Merge multiple loans
Do you currently have multiple loans with different lenders? Then it can be interesting to take out your loans and combine them. The advantage of this is that you only have to deal with one party where you have to pay off your debts. This makes the financial picture a lot clearer.
Take out loan checklist
After going through the above information you will have come to a few loans of which you have checked the conditions and interest, but also the lenders themselves. As a final step, we have a short checklist for you.
- Multiple quotes
Have you requested at least two quotes from different lenders? What are the options for you personally and what are the associated costs when you take out a loan?
- Permit from AFM or DNB
Have you checked the lenders for a license with the AFM or DNB? Has no news item from them been published and has there never been a warning about this company?
Have you read the conditions carefully? What is being said about early repayment and is life insurance compulsory?
How long does the interest rate apply for which you take out the loan? How much will you pay per month and what part of it is interest?
- No rush
Are you being pressured by the lender to take out a loan quickly? Do you get all the time to go through the conditions et cetera at your leisure and at home?