What types of installment loans are there?
September 1, 2019
First you look at how much you want to borrow. If you have determined how much you want to borrow, look at the type of loan. As indicated, there are many different types of loans. We have described a number below.
This loan is used for buying real estate. The property also serves as collateral. The bank thus has certainty and if the interest is not paid or if the mortgage is not repaid monthly, the bank can sell the property. The contract specifies how much monthly interest must be paid and how much money must be repaid. It is no longer possible to take out an interest-only mortgage at a bank. You are required to repay the mortgage within a certain period.
The revolving credit is a loan in which all or part of the amount may be withdrawn and repaid during the term. This loan is useful if you need money, but do not know exactly when and how much. With a revolving credit you pay a variable interest. A revolving credit can be taken out for, for example, furnishing a house, because there are always unexpected extra costs and it is useful if you can borrow something extra each time it is needed.
A personal loan is a loan in which the entire amount is paid out in one go and part of it must be repaid monthly. With a personal loan it is not possible to take up the repaid part. This is in contrast to the revolving credit. A personal loan is often taken out for a one-off expense such as a television.
A credit card is useful if you want to make online purchases or want to withdraw some extra money. The entire amount is debited from your bank account every month. Sometimes there is the possibility to repay the amount in installments.
The mini loan applies to loans that are limited to a few hundred euros. No BKR test is done for this, but of course the financial situation of the person applying for this loan is considered. The disadvantage is that these loans only have a duration of a few days up to a month. Another disadvantage is that high interest rates are also applied here.
Purchase by installment.
At some companies you can purchase installments. This means that you only have to pay the amount later. In some cases this is useful if you want to have a certain TV or fitness device, but cannot pay at the time of purchase.
Are in red.
Many banks give the option to be in the red on a bank account so that you can use that little bit extra every month. The red is usually an amount from € 500 to € 1000 and you pay interest on the amount that you are in red. You do need to know that when you are in the red you sometimes pay 8 to 15 percent interest per year. Standing in red is therefore definitely not recommended.
When it comes to borrowing money, it is wise to request quotes from various sites or from various banks. In this way you ensure that you ultimately pay as little interest as possible. Put these quotes next to each other and choose the best provider. Don’t just look at the interest. There are things that you have to take into account. Consider the possibility of repaying the loan earlier without penalty. You may also need to take out life insurance with a large loan.
Responsible borrowing is important. We therefore advise you not to borrow if you do not really need anything. For example if you want to buy a new car, but your current car can still last for a number of years. You can then save better. After all, if you save money you receive interest. Sometimes borrowing may be necessary and you have no other choice. For example in the case of a study. It is important that you know where you stand in advance. The money that you borrow must always be repaid, including interest.