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Pay attention! Borrowing money, costs money
Tighter borrowing standards for 2021

Date: December 7, 2020
Author: Ronald Gracia

Borrowing standards for consumer credit tightened as of April 1, 2021

Excess credit from consumers, or borrow more money than you can bear financially? It remains a difficult balance. Especially since the corona crisis with financial uncertainties for many people. As a government, how do you maintain the freedom to borrow money, while also ensuring that consumers can continue to pay their fixed costs and regular living expenses?

In collaboration with the Dutch Authority for the Financial Markets (AFM) and Nibud, an adjusted method will be introduced at the beginning of 2021 to prevent over-crediting from consumers even better.

This so-called borrowing standard that determines how much people can borrow is being tightened. The Dutch Banking Association and the Association of Financing Companies will include the new method in their Consumer Credit Code of Conduct as of April 1, 2021. In practice, this means that consumers will be able to borrow less.

A transitional arrangement will take effect on 1 January. Lenders will work with a surcharge that averages the difference between the new and old borrowing standards. This surcharge has been coordinated with Nibud and the AFM and protects customers from excess credit from 1 January 2021.

Why is a loan standard important?

Borrowing money has always been around and should also remain possible. But a credit that is too high or too long, causing financial problems, does not help any consumer.
Financial institutions can determine the financial position of customers via a loan standard. The purpose of such a loan standard is that people do not borrow more than is responsible and therefore stay out of financial problems.

In the refined methodology, lenders will map out the relationship between income and costs of customers even more closely.

Mortgage costs, costs for the car (insurance, tax) and the bill for childcare will also be included in the calculation of the financial capacity. This was not the case before. In most cases it will mean that people can borrow a lower maximum amount.

Supervision of borrowing standards and Consumer credit code of conduct

Lenders are legally obliged to protect consumers against over-lending. The financial watchdog AFM supervises compliance with the borrowing standards by financial institutions.

This legal obligation concerns a so-called 'open standard'. This means that lenders may and must themselves implement the standard.

SNLO loan standards and aftercare

Snaploan Online is also taking the new loan standard into account. Moreover, we have been offering aftercare to our customers since our inception. Aftercare is important to be able to continue to borrow responsibly and safely, which is why we continue to guide our customers throughout the entire term of their loan.

We contact our customers at least once a year to discuss whether everything is still in order in terms of expenses / income and the living and family situation. Is the loan still going well? Are interest and conditions still in line with the market? Are lower interest rates or better conditions now available? We make our customers aware of this and transfer their loan to the cheaper version free of charge.

We know from experience that this extra service helps both the customer and us. The aim of our aftercare is that consumers can continue to pay off their loan as responsibly as possible. We have also fully set up our systems for this, so that we do not lose sight of anyone and can work flawlessly. With a good result: 98% of our customers can pay the repayments every month without any problems!

Ronald Gracia

Partner and Head of Acceptance

Author: Ronald Gracia

Michel is a real all-rounder. He knows everything about credits. Whether it concerns a personal loan, a revolving credit or a combination credit for consumers, you have to go to Michel. Michel is friendly, patient and always has time for a chat or a listening ear. '

Specialization within Snaploan Online - Acceptance of applications, issuing via e-mail and My SNLO of the overviews containing the possibilities of our partner banks.

'I make sure that you can compare all options at a glance and that you can make the right choice. I think it is really important that you take out a loan that suits your needs. '

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