Borrowing money, hopefully we don’t do it often, but if we need a little more financial space, it is useful if we know how to best solve this. Everyone can use some loan tips if extra money is needed. After all, it is about your financial situation and if you can save with it you will of course do this. Much has changed in recent years when it comes to borrowing money. The reasons for this are the crisis and the DSB debacle. The rules for taking out a loan have changed dramatically in recent years.
Previously it could not do when it came to borrowing money. You could borrow almost unlimited and nothing was too crazy. Nowadays, borrowing has become a lot more difficult due to all sorts of strict rules from banks and financial institutions.
Don’t borrow too easily
You know that if you take out a loan to buy a new car, a household appliance or a kitchen, you pay a lot of interest on this loan. Although interest rates have been extremely low in recent months, borrowing still costs money. You do pay interest on the loan you take out, but this interest is not nearly as high as the interest that you would pay in the case of a redundancy on your payment account. Also the interest on your credit card or the installment purchase is usually higher than the interest on a loan.
Before taking out a loan, first consider whether or not you can save the required money. This saves you a lot of money!
Do not take out a loan if you have savings
If you have savings, it is almost never wise to take out a loan in addition. The interest that you pay on the loan is always higher than the interest that you receive on your savings. Only if you need a small amount could you borrow it. This concerns an amount smaller than 1000 euros. You could take out a mini-loan here, you will pay it back within 45 days. Because of this you never pay much in interest.
Watch out for (too) low interest rates
If you want to borrow money and you would pay an extra low interest, make sure there is no snag here. The low interest rate may be an offer or a bait. Therefore, read the conditions and especially the fine print carefully before taking out a loan with such an interest.
Is the lender affiliated with the AFM?
If you take out a loan with a lender that you do not know, it is wise to see whether this financial institution has a license from the AFM (Financial Markets Authority). Indeed, there is still a warning for illegal lenders.
Before you take out a loan, it is a good idea to compare the lenders. You can save so much money on your loan. Indeed, only the interest already differs considerably between the lenders. But don’t forget the conditions when comparing. In addition to the banks, there are also many lenders that only operate on the internet. You will see that you can gain a lot from this.
Note the monthly charges
When applying for a loan, your monthly payments will increase. The loan must be paid back every month. Can you continue to pay these monthly charges in the future? Of course you cannot know everything in advance, but before you apply for a loan you must ask yourself a few questions. Is there a chance that you will become unemployed in the short term? Are you moving house soon? Is there a child attendance? Are there any additional costs that you have to take into account? Take these questions seriously before you actually apply for a loan.
There are insurance policies that you can take out with which you can cover the risk if you can no longer pay the monthly costs in the event of disability, unemployment or death of your partner. These insurance policies are generally quite expensive.
Take out the right loan
A loan always costs money. The longer the loan runs, the more interest you will pay. So make sure you take out a loan that matches the purpose for which you borrow money. If you take out a loan to buy a car, you know that the car will be worth less every month. It is then important that the loan is also lower each month. If, for example, the car lasts for another 3 years, it is nice if the loan has also been repaid by that time.
Are you taking out a loan with a fixed or variable interest rate? And if the interest is fixed, is this for the entire duration? With a fixed interest rate you have more certainty because you know where you stand.
When taking out a loan, also pay attention to the so-called entry interest rate that some lenders offer. At the start of the loan you pay a low interest rate but over time the interest rate will rise quickly. You will understand that the benefit will disappear like snow in the sun.
If the loan has a variable interest rate then this does not necessarily have to be wrong. It is then necessary that you can repay the loan earlier or you can refinance the loan. You can thus optimally benefit from the low entry interest rate. If the loan does not have the flexibility to repay earlier or to switch, you should not start.
Read the conditions carefully
When taking out a loan, there are a few things that you should pay attention to.
- If the amount you receive is higher than what you have requested, see if there is no insurance associated with the loan.
- How much interest do you pay on the loan? Is the interest rate fixed or variable? If the interest is fixed, is it fixed for the entire term? Remember that with a variable interest rate you do not know what the monthly charges are over a certain period.
- Do you only pay interest or do you also pay off the loan? Are you allowed to redeem earlier or will you be fined if you repay early?
- If you pay too late, how much penalty do you have to pay?
- Is the term of the loan variable?
- Do you have to pay closing costs and what additional costs are there possibly more?
- Are there insurance policies linked to the loan and what do you pay for this?
Don’t borrow too much
Only borrow if there is no other solution. And do not borrow more than necessary. A higher loan also means higher monthly charges and these come back every month. If you can no longer pay the monthly costs, it will go from bad to worse. In the worst case, you will get into debt restructuring. If you notice that the problems are piling up, report this to the lender in time. In this case, do not take out an additional loan to pay off the other loan.