The list below lists all types of consumer credit with an explanation of the specific characteristics. There are many differences between these types of borrowing, but the fact remains that borrowing always costs money.
Consumptive credit is registered with the Credit Registration Office . This means, among other things, that your loan may have consequences for the amount of other loans you want to take out, including a mortgage.
from the households who borrow, lends for a car
With a revolving credit you get a credit limit. That is the amount that you can borrow as much as possible. This is, for example, 10,000 euros. You can withdraw the entire amount in one go. For example for a large purchase. You may also include the amount in parts.
From the moment you have withdrawn, you also start paying back. Each month you pay at least 2 percent of the amount withdrawn. That is partly interest, and part repayment. Have you taken the entire amount and repaid it? Then you can borrow again.
When you need irregular amounts, for example for a long-term renovation that you do not pay with a mortgage.
- Often the interest on a revolving credit is lower than with other types of credit.
- You are flexible in withdrawing amounts.
- The interest rate is variable: the interest rate is not fixed for the entire term. However, you pay a fixed amount of interest and repayment every month. Which part of that amount is repayment and what part of interest depends on the interest rate at that time.
- You do not know exactly how long you have to pay in advance. With the minimum amount you are repaying for at least 4 years.
- You have to take action yourself if you want to pay more per month and therefore want to get rid of the loan faster.
- Temptation to continue to withdraw credit
Tip: With a revolving credit the term is variable. But in the end you also have to pay off this credit. It may be useful to keep a target date for yourself when you want to do that.
With a personal loan you can borrow a predetermined amount. When the loan is taken out, the amount of the interest and the term are fixed.
Products with a certain lifespan. The term of the loan should not be longer than the life of the product, so that you have paid off the product if you want to replace it.
- The interest is fixed. You always know exactly where you stand.
- The term and the redemption schedule is fixed. You know when you have finished repaying.
- The interest on a personal loan is usually higher than the interest on a revolving credit.
Being red means that you can withdraw more money than you have on your current account. You can often see a red amount on your payment account up to a certain amount. For example up to 1000 or 2500 euros. Every time you use this credit option, you pay interest on the amount withdrawn. You pay lower interest rates when you are allowed to pay red than for an unauthorized overdraft .
Tip: With most banks you can set an e-mail or SMS when you are (almost) red.
Taking care of an expensive month.
- Ease. You do not have to apply for a loan at a time.
- Can for small amounts.
- High interest.
- Temptation to stand structurally red.
Buy on installment (via home shopping organizations or web shops)
Some companies offer the possibility to pay the bill for a product in installments, with interest. Even when it comes to low amounts. This can be done at shops, but also when you order online, through so-called home shopping organizations.
It is also possible to have a kind of revolving credit at home shopping organizations. You may then purchase up to a certain limit, for example up to 1,000 euros. If you have paid part of the bill, you may make new purchases.
- Loans for small amounts possible.
- You often pay a higher interest rate at a home shopping organization than with a loan from a bank.
- There is a lot of temptation to buy more, or to keep buying.
Read more about the purchase of a telephone set for payment.
Credit cards are issued by banking institutions and credit card organizations. For example, MasterCard or Visa. With a credit card you can pay in many shops, hotels and restaurants. Both at home and abroad. You can also pay with a credit card on the internet. You can pay with a credit card until a certain limit is reached. With a credit card you buy on account. This account will be deducted from your current account a few weeks later. You thus postpone the payment.
- Purchases of products
- Valid in many places, including abroad.
- Often extra service, such as insurance.
- High interest. Sometimes credit card organizations offer the possibility to pay the bill in installments. If you pay in installments, you will be faced with a high interest rate. In addition, the limit is reported to the BKR. This makes it less easy for you to take out another loan.
- In some cases you must have the discipline to redeem a credit card debt.
- You pay for the possession of the credit card. This is usually 20 to 50 euros per year.
- Temptation to buy more.
More and more stores and businesses are issuing loyalty cards or shopping cards. With some of them you can also buy on credit. This is then comparable to a credit card. With some loyalty cards you buy an item, for which you will receive the invoice later. Sometimes you can pay the bill in installments.
- Repeated purchases from the same store
- Credit limit and high interest
- High interest.
- Temptation to buy too much.
When you lease, you pay a fixed amount per week or per month for a number of years. There are two types of lease: financial leasing and private leasing (operating leasing).
1. Financial leasing
Financial leasing is very similar to lease purchase. It is possible, for example, to purchase a kitchen or parquet. In most cases, maintenance and warranty provisions are included in the lease agreement. In many cases you can purchase the product at the end of the lease term for a symbolic amount. Only when you have paid the amount of the purchase option are you the owner.
- When using a specific product
- Often extra service, such as maintenance.
- The interest you pay on financial leasing is tax deductible if you use the product to improve the first owner-occupied home.
- Loan is linked to a specific product. You can not take off the loan without removing the product (which is difficult with a kitchen or parquet).
- If you can no longer afford the repayment, and you have not yet paid off 75 percent of your debt, the leasing company can claim the product.
2. Private lease
This form of lease is more like renting. After the contract has expired, you are not the owner of the item for private leasing. For example, cars are offered in this way (read more about buying a car ).
You can buy the article afterwards.
- When using a specific product.
- Often extra service, such as maintenance
- Loan is linked to a specific product. You can not get rid of a loan without removing a product (which is difficult for a kitchen or parquet).
- Possible extra costs if something changes in your situation.
Also read: ‘ What should you pay attention to when using private leasing (AFM)
Borrow with collateral
When borrowing with collateral you lend an amount with financial or material assets as collateral.
1. Pawn credit or repurchase
There are companies where you can pledge items such as electrical appliances or jewelery. The article is stored at the company. In exchange you will receive a sum of money. When you have enough money again, you can buy the item back again. Against payment of the loan amount and a surcharge. These companies are called pawnshops or pawnshops. Do you not collect the article within a certain period? Then the pawnshop can sell the item.
In The Hague and Amsterdam these are municipal institutions. For example the Stadsbank or Bank van Lening. In other places, commercial companies are also active as pawnshops.
Pandkrediet can be useful if you have a temporary shortage and need the money quickly.
- You do not have a debt with a credit facility. You do not have to pay interest and you are not chased by creditors. The worst thing that can happen is that you can not buy the item back.
- The costs are pretty high. The storage costs are much higher than the interest on most loans. The municipal pawnshops calculate the maximum interest rate of 14 percent on an annual basis. Commercial companies are often far above this.
Do not do any persistent problems
Do you have ongoing money problems? Then loan credit is not a solution for you. You will probably not get enough money to buy the item back. Do you need money and are you not attached to the article? Then you can also sell the article. This is possible at the pawnshop, but also through other channels. For example via Marktplaats. Often you will receive more than when pledging.
2. Advance securities
Do you own securities? Then it is possible to get credit with these effects as collateral. It does not matter what you spend the credit on. Often such a credit is used to buy new securities. Another way to get a loan with collateral is to take out a life insurance policy. This is only possible if the conditions of the life insurance policy state that the policy is to be granted. The credit can be obtained from the life insurance company. The amount that you can borrow is about 90 to 100 percent of the surrender value. You can withdraw the credit until no later than the end date of the insurance.
- Due to the collateral, the interest rate may be lower than the interest on a revolving credit or personal loan.
- The collateral will be worth less if the prices fall. The bank can then request you to supplement the collateral.
Via the internet or SMS it is possible to quickly borrow a small amount. You must repay these loans within a short period of time. For example, within two weeks. This loan is called flash credit or mini credit. Because of the short term, these loans did not fall under the existing legislation for loans. Providers made good use of this by charging high costs. This they called no interest, but treatment costs.
In the meantime, the law stipulates that a flash credit must meet the same conditions as other loans. All mandatory costs at closing must be converted into an interest rate. This may not be more than 14 percent per year. The providers of flash credit have therefore adjusted their offer. They now operate from abroad and now demand (extra) money for certain services, such as:
- a guarantee
- an advice about insurance
- quickly transferring the money
These services may not be compulsory in theory, but probably necessary in practice. In that case, these types of loans are very expensive. In addition, the lenders charge hefty fines when you pay back late. Even if you are only one day late.
Do you need money in the short term? Then think carefully before you use such a flash credit. If it is really necessary, red is a less expensive option. For example, 150 euros will cost red, compared to 14 percent for 21 days, less than 1.50 euros. This is much less than the 25 euros that some parties ask for, for example, an urgent booking or a guarantee.