Looking for a loan with a low interest rate?

You probably already know that borrowing money costs money. To keep the costs of borrowing money as low as possible, you have to look for a loan with a low interest rate. Credit Savers tells you what to look for when it comes to interest.

What is interest actually? Interest is the amount that you pay on the loan amount. This is a percentage of the loan amount. If you borrow more, you also pay more interest. The interest on small amounts is often relatively higher. This is due to the way the interest is built up. Below you can read more about which components the interest consists of.

How is interest accrued?

Interest consists of the following components:

  • Risk premium. This is a compensation for the risk that the lender runs that the loan is not repaid. This component can therefore vary depending on the risk.
  • Compensation for inflation. The lender cannot use money that has been lent. It may be that due to inflation the money lent is worth less. To compensate for this, you pay an inflation compensation.
  • Funding costs. These are the costs that must be incurred by the lender to purchase money yourself
  • Profit storage. Parties that lend money also want to earn something from this.

More about the risk premium

As mentioned, the risk premium can vary from person to person. If you apply for a loan while living together or are married, you always need a signature from your partner. The lender assumes that you run a household together and are therefore jointly responsible for the financial side. This also means that you are jointly responsible for paying back the loan. This is positive for the interest rate. If you both have a fixed salary, you can borrow more at a lower interest rate. After all, the risk is spread over two people. So there is more chance that the loan will be repaid. You can therefore take out a loan with a low interest rate if you are in pairs. This does not apply if either of them has a negative listing with the Credit Registration Office.

Which types of loans have a lower interest rate?

Which types of loans have a lower interest rate?

Not every loan has the same high interest rate. For example, the loan form determines the risk that the lender runs, but the maturity also plays a role. The longer the duration, the higher the inflation compensation and the more flexibility, the higher the funding costs will be. Below you can read more about the different loan forms and how the characteristics of these loans influence the interest. Mortgage

A mortgage, for example, is a loan with a low interest rate. With a mortgage loan, there is property as collateral for the loan. Because of this collateral, the risk is much lower. After all, the lender receives the collateral if the loan is not repaid. Revolving credit

A revolving credit has a flexible interest rate. This is because money is made available to you, but you decide how much you withdraw and when. As a result, the funding costs are also variable. If the lender has to pay more to buy in money, this will be charged immediately and your interest will therefore be higher. Although the revolving credit is not directly a loan with a low interest rate, this type of loan does offer many possibilities in terms of flexibility. Loans with high interest

Loans that are known for the high interest are debts on a credit card, red on your checking account and a mini loan. If you want to borrow money with a low interest rate, it is best to avoid these types of loans.

The duration of your loan

The duration of your loan

However, interest is not the only thing to look out for when you take out a loan. The duration is also important. With a mini loan or flash loan, the interest is relatively high, but the term is also very short. This means that you have repaid your loan within 2 months. A mini loan involves small amounts, but even then it is good to realize how long your loan must be repaid. The mini loan is the only way to borrow money with a (negative) bkr registration . 

Fine for early repayment

Fine for early repayment

Because the interest is made up of various components, the lender would like to receive the full amount. This means that you cannot pay off in the interim. Do you want to pay off your loan sooner? Then you have to pay a fine for this. However, this does not always have to be a disadvantage. You can calculate yourself what the costs are if you let your loan continue until the end of the term. If this amount is higher than the fine, then it is worth paying off early. Do you want to borrow money and are you looking for a loan with a low interest rate? Then have a look at Credit Saver. Enter your details here and you will immediately receive a quote. You can compare this offer with other providers in order to take out the loan with the lowest interest rate. Everything applies, read the conditions and the fine print carefully because borrowing money costs money. Although the interest is still so low, you have to pay back the full amount plus interest.  

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