May 26, 2020
The legal maximum interest on a loan is currently 14%. In order to accommodate the consumer during this time of corona, the cabinet is lowering this rate to 10%. The reduction will probably take effect on August 1 and will run at least until the end of the year.
The corona crisis has put many Dutch people in financial difficulties. They have less financial scope for certain necessary expenses. Purchasing on installment can then be attractive to them. However, the mail order companies and web shops that offer payment in installments often apply the maximum interest rate of 14%. The costs for these short-term loans are therefore high. Therefore, on the advice of Nibud, the cabinet has decided to lower the maximum interest rate on loans to consumers from 14% to 10%. This type of credit therefore becomes less risky.
Temporary measure, only for new credits
Minister Wopke Hoekstra (Finance) wants to introduce the measure 'as soon as possible', possibly from 1 August. The reduced interest will then apply to all new loans taken out by consumers. Did someone already have a consumer credit? In that case, the interest that was agreed upon at the time of taking out, before the reduction, continues to apply. This does not apply to existing revolving credits. This loan form has a variable interest rate, which is also reduced to a maximum of 10% due to the reduction. The reduction is currently a temporary crisis measure that will apply until the end of the year. It may be that after that the maximum credit compensation will be structurally reduced, but this is still being investigated. Nibud does not think an even lower rate than 10% is a good idea. Because if the interest on overdraft and buying on installment becomes too low, borrowing can become too tempting and habituation to credit can occur, according to Nibud.
Save on credits
Responsible lending is an important value for abdallahka.com. We therefore consider the lowering of the maximum interest rate an excellent improvement, because the risk of borrowing money is reduced. But we also emphasize that the interest on a 'normal' loan is usually (much) lower than 10%. It is therefore worth checking whether a loan is better financing than buying on installment . Many people also have several small loans with a high interest rate. If they can combine these debts and place them in one loan with a lower interest rate, they will immediately see their monthly costs fall.
