Borrowing money, costs money

What conditions apply to loans?


23 August 2019

If you want to borrow money, you have to take all kinds of conditions into account. There are conditions that you as a consumer must meet. But also conditions that apply to the loan itself. Those conditions depend on the loan form you choose.

Which loan do you choose?
If you want to take out a loan, you can choose from different loan forms. The best known are the Personal Loan and the Revolving Credit. It depends, among other things, on your spending goal which loan is suitable for you. The conditions of one loan form suit your spending goal better than the conditions of the other loan form.

Conditions Personal Loan

The Personal Loan is the most popular loan form. Very understandable because the conditions are aimed at certainty. As a consumer, you know exactly where you stand. The Personal Loan is very suitable if you know exactly what amount you need, for example for the purchase of a car. What are the conditions of a Personal Loan?

Conditions for stability and security

Fixed loan amount
You borrow an agreed amount and get it deposited into your account. It ends there. You cannot withdraw the amounts that you repay on your Personal Loan. This makes the loan less flexible, but the advantage is that you have repaid the loan in full at the end of the term.
The maximum amount you can borrow depends mainly on the level of your fixed income, your age, your living and family situation and whether you have a BKR registration.

Fixed term
A Personal Loan has a fixed term. This means that you pay off the loan within a set number of months. You can choose from different durations. With a short term you pay a higher monthly amount than with a long term. But you also finish paying off earlier, which means that the total costs of the loan are lower. The choice is yours.

Fixed interest
The interest on the Personal Loan is fixed for the entire term. If the interest rate rises or falls during that period, this will not affect your loan. That interest remains the same. So no unexpected increase in your costs.

Fixed repayment
Because the interest and the term are fixed, you pay the same monthly amount every month. That way you keep a better grip on your money.

Conditions for flexibility

Extra repayments
Do you want to make extra repayments on your Personal Loan? In that case, you pay a fine with some providers. This is not the case with us. With all our Personal Loans you can always make extra repayments without penalty. This way you can pay off the loan faster.

Conditions Continuous Credit

A Revolving Credit can be a solution if you cannot precisely determine the costs of your spending goal in advance. It is a flexible loan form that gives you a lot of freedom.
What are the conditions of a Revolving Credit?

Conditions for flexibility

Withdraw money up to your credit limit
With a Revolving Credit you will receive a credit limit from the bank. This means that you can withdraw money up to a certain amount. You determine how much you absorb. You can also immediately withdraw repaid amounts, as long as you do not exceed the credit limit. You only pay interest on the amount withdrawn.
You cannot exceed the credit limit and therefore cannot withdraw more money than agreed. The level of your credit limit mainly depends on the level of your fixed income, your age, your living and family situation and whether you have a BKR registration.

Variable interest
The interest on a Revolving Credit is not fixed, but is variable. One month the interest can therefore be higher than the other month. That makes no difference for the installment amount. You agree on a fixed amount that is debited monthly from your bank account. That fixed amount consists of an interest part and a repayment part. If the interest rate rises, your interest portion increases and the repayment portion decreases. It will take you longer to repay the loan.

Extra repayments
With a Revolving Credit you can always make extra repayments without penalty as much and as often as you want.

Variable duration
The Revolving Credit is flexible because you can withdraw repaid amounts again and because the interest can change. This flexibility has consequences for the term. This is not fixed with a Revolving Credit. If you re-withdraw the amounts withdrawn, it will take longer to repay the loan. Even if interest rates rise, the term will be longer. The interest part of your fixed monthly amount will then increase and as a result the repayment part will decrease. It will therefore take you longer to repay your loan.

Conditions for stability

Fixed monthly installments
Once you have withdrawn money, a fixed amount will be debited from your regular bank account every month. That monthly amount consists of an interest part and a repayment part.

Limited duration
Since 1 May 2019, a maximum term of 15 years applies to new revolving credits. Older revolving loans often do not have a fixed term. Nowadays banks sometimes limit the options, for example by lowering the credit limit monthly. For example, the loan cannot continue indefinitely. Ask your advisor for the exact conditions when you take out a Revolving Credit.

Which loan form suits you? Call us for advice.

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