9.5

Borrowing money, costs money. That has become a well-known slogan. But what exactly does it cost?

When you borrow money, you pay a certain amount per month during the agreed term to repay the loan. This amount consists of interest and repayment. The amount of this monthly amount differs per loan.

The interest is fixed with a personal loan . You know in advance what amount you will pay. The total costs depend on the term of the loan and the interest. When you opt for a shorter term, you pay less in total, purely because you pay interest over a shorter period.

**Example**

You borrow an amount of € 25,000 at an interest rate of 4.1%. Below is an overview of the costs for different maturities:

Duration | Monthly costs | Total costs (interest + repayment) |
---|---|---|

48 months | € 564.76 | € 27,108 |

60 months | € 460.69 | € 27,642 |

72 months | € 391.41 | € 28,182 |

The monthly amount of a revolving credit is a percentage of the credit limit that you have agreed with the bank. This usually varies between 1% and 2% of the loan amount. With a revolving credit, the interest is variable , so the interest can rise or fall during the term.

**Example**

You borrow € 25,000 with a repayment percentage of 1%. The amount that you pay each month is € 250.

If the interest rate is 4.5%, you pay € 93.75 interest in the first month (namely: 25,000 x 4.5% / 12 months). Your monthly installment is set at € 250. This means that you pay € 156.25 in repayment and € 93.75 in interest. After this first month, the amount of your loan amount is still € 24,843.75 (namely: 25,000 - 156.25).

The lower the repayment percentage that you choose, the lower the monthly amount. But that also means that your term is longer and therefore you ultimately pay interest over a longer period. In total, this will cost you more than if you opt for a higher repayment percentage. The higher the monthly amount, the higher the repayment percentage and the shorter the term, the lower the costs.

You can take out a personal loan or revolving credit through a professional credit intermediary, such as Snaploan Online, but of course also directly through your own bank. You may not expect it, but the interest rate of your own bank is generally higher than if you take out a loan through us.

The Dutch Credit Company is specialized in mediating between you and our partner banks. Both Snaploan Online and our partner banks work completely online and the entire working method is automated. In addition, we are 100% focused on providing loans, that is our job.

In contrast to the 'normal' bank, which offers a much wider range and therefore has to divide its attention over many areas. These 'normal' banks are large organizations with a lot of staff, an extensive and expensive branch network and strong marketing. This is associated with high costs. Our partner banks do not have these costs, so they can make you a much more competitive offer.

A simple calculation example. You can take out a personal loan of € 25,000 through Snaploan Online at an interest rate of 3.5%. This means that you pay € 1025 in interest per year. You take out the same personal loan of € 25,000 with Rabobank at an interest rate of 6.75%. You now pay € 1688 per year for the same amount. **A difference of € 663 per year** .

Being in the red is an accessible way of borrowing money. You withdraw more money than there is in your checking account, usually up to a certain limit. It seems very easy, but beware: being in red is an expensive form of borrowing money. You pay interest on the amount that you are overdrawn. This interest rate can be as high as 14%. For every € 1000 that you are overdrawn, you therefore pay € 140 in interest per year.

If you are regularly in the red, it is wise to take a look at a revolving credit . There, too, you can withdraw extra money when you need it, but you generally pay a much lower amount in interest than with overdraft.