Interest on (personal) loans even lower in 2020
For years, interest rates on consumer credit such as personal loans and revolving credit have been falling. Especially in 2019, interest rates fell remarkably, to a minimum interest rate of 3.9%. The reason for the continuing fall in credit interest rates is the fierce competition between the various lenders: if one bank lowers the interest rates, the other automatically follows.
Although the interest on consumer loans is not yet at such a low level as the mortgage interest rates (pay) and on the other side of the story savings interest (received), many consumers are nevertheless benefiting significantly from the lowered interest rates.
It is expected that in 2020 the interest on borrowing money will fall even further due to competition.
In this article, we explain what you can expect from the interest rates and other conditions for consumer credit in 2020.
Interest on revolving credit: an overview over the years
While interest rates for personal loans have fallen steadily in 2019, this is much less the case for revolving loans. A revolving credit is also known as a 'dead-end credit': the interest rates are variable, are higher and withdrawn amounts are available again after replenishment. Full repayment of a revolving credit plus interest becomes difficult for many people in this way, especially for the economically weaker households. After all, money is always available, but the interest rates are a lot higher and can vary; moreover, there is no fixed end date.
The interest on a revolving credit is higher, because an interest rate cut has an enormous impact on all revolving loans that are currently running at a bank and an interest rate reduction of a variable interest therefore affects all customers with such an interest and that costs the bank a lot of money.
This is different with a personal loan: a lower interest rate of the fixed interest (which is part of a personal loan) only affects new customers. Not on current personal loans: after all, the interest is fixed. In other words, not only for customers, but also for the banks themselves, revolving credits pose a higher risk than personal loans.
Interest rates have fallen significantly for personal loans and, therefore, slowly for revolving loans (DK). A big drop in DK interest would not be fair to existing customers either. Because why should only new DK customers benefit from an interest rate cut? Any interest rate cut therefore applies to all customers with a variable interest rate (revolving credit).
To protect consumers from borrowing money irresponsibly, the supply of revolving credit has fallen sharply . Consumers themselves are not enthusiastic about this form of loan either: less than 5% of our customers take out a revolving credit. This trend will certainly continue in 2020.
Below you can see how interest rates for revolving credit have developed in recent years:
Personal loan: fixed interest always lower
It could be that interest rates for personal loans fall further in 2020. This applies to personal loans from 25,000 us dollars, but also for the somewhat lower loans. Especially with the higher amounts, the interest rate could fall even further, because the fixed costs per contract of a loan with higher loans (from 15,000 us dollar) weigh less heavily in the interest rate.
Borrowing money could therefore just become even cheaper in 2020. The differences between lenders remain large, sometimes up to interest differences of about 4% between the cheapest and the most expensive loan. So it always pays to compare loans.
In order to be able to compare properly, not only the amount of the loan interest is important, but also the term of the loan and the conditions. Often the following applies: the lower the interest, the longer the term and the more expensive you are still out. Good comparison and prioritization is therefore the motto!
Personal loan through SNLO: the benefits
95% of all consumers who borrow money from us opt for a personal loan. That is not without reason, because of all the loans available on the market, a personal loan offers the most financial security and benefits:
A personal loan through SNLO offers one of the lowest interest rates in the Netherlands: from 3.9% and this will be even lower in 2020.
- With a PL you are not in for unpleasant surprises:
the low interest rate is fixed throughout the term.
The term is also fixed: you know in advance exactly what you will pay and when you have paid off the loan.
- Fixed monthly charges.
- Additional repayments are always allowed and are free of penalties. If you have a financial windfall, it is wise to make extra repayments. This always saves you money, because in any case, a lower or no loan is always cheaper.
All in all, a personal loan is many times more sensible, cheaper and more responsible than a revolving credit. That is precisely why more than 95% of all our customers also choose this loan form.