Personal Loan Simulation

A personal loan is a term that indicates a certain form of a consumer loan. With a personal loan, you will receive the loan amount in one go once the lender has decided to grant you the requested loan. fleshes this out

You then have to repay the personal loan in a number of predetermined installments. However, the lender will not grant you the loan free of charge. In addition to the repayment, you will also have to pay part of the interest. For this reason, each periodic repayment period will be based on a partial repayment and a partial interest. The interest payment is a pre- agreed percentage of the outstanding debt. Incidentally, there may be a fixed or variable interest payment with a personal loan.

In the loan contract that you sign when taking out a personal loan, all agreements made will be included. You can think of:

  • the duration of the loan,
  • the amount of interest,
  • the interest type,
  • the periodic repayment terms.

These agreements can not be changed during the term of the personal loan.

A personal loan, unlike a revolving credit, does not give you the option of taking back the repaid portion of the loan. The course of a personal loan will therefore be fully established without your having to make changes in the meantime or to pay off (part of) the loan amount free of charge. However, the interest on a personal loan will be lower than with a revolving credit due to the lack of interest rate risk.

Why take out a personal loan?

The reasons for taking out a personal loan may vary from person to person. Roughly, however, you can make a distinction between:

  • A concrete project to take out a personal loan, such as:
    • repairs to your home,
    • purchase of a certain product, for example a new laptop or a new couch.
  • Special events for taking out a personal loan, such as:
    • anticipated costs, for example a marriage or birth,
    • unforeseen costs, such as illness, an accident or a death.
  • Improving your living environment by taking out a personal loan, such as:
    • the redesign of a room,
    • place a new kitchen or bathroom,
    • replacing your boiler.
    • perform energy-friendly works.
  • Building up a cash reserve by taking out a personal loan so that your income and expenses are better balanced within your budget. This is very useful if you have a variable income, for example because you:
    • works as an independent entrepreneur,
    • doing freelance work,
    • depend on seasonal activities.

Is a personal loan really necessary?

In some cases, taking out a personal loan is a bitter necessity and the only way to stay out of financial trouble. In other situations you could also opt for alternatives to a personal loan. With this you can think of:

  • refraining from borrowing money and postponing financing until you have saved enough money for this,
  • take out a revolving credit so that you can borrow and repay money in a flexible way,
  • are red at the bank, but this can often only be up to a certain height, which means that this will not always be sufficient,
  • use a credit card to make a payment or purchase.

Standing in red at the bank and the use of a credit card are, however, very expensive forms of borrowing. Certainly if you withdraw larger amounts of money, the share of interest payment that you have to pay on this will become very large. The final borrowing costs in such cases therefore weigh very heavily with regard to the loan target.

How much can I borrow with a personal loan?

How much can I borrow with a personal loan?

The amount that you can borrow through a personal loan will depend on many factors, for example:

  • the amount of your monthly income,
  • your monthly fixed costs,
  • any other debts,
  • a possible maintenance obligation,
  • your work situation (a permanent or a temporary employment contract ),
  • your family situation (single, in a relationship or a family with children)
  • your credit history and any negative listing at the CKP.

For that reason, the amount that you can borrow does not have to be the same as that of another borrower with a comparable loan target. After all, a person with a good income and no outstanding debts has a greater repayment capacity than a person who has both multiple debts and little income. For a lender, the financial risk will be a lot higher in the latter case. In this example, if the last-mentioned person is also listed negatively at the CKP, then borrowing has become virtually impossible.

Interest on a personal loan

In our country, as in many countries, the maximum borrowing costs of each personal loan are restricted by law. As a result of these legal provisions, an annual percentage rate of charge (APR) cannot be higher than the fixed maximum interest rate and a number of other predetermined costs. As a borrower you will be protected against extremely high interest rates if you start borrowing money.

However, lenders are, to a certain extent, free to determine the interest rate of a loan. Of course, the maximum interest rate set by law will have to be taken into account. A provider of a personal loan may therefore never exceed the maximum interest rate.

If you want to take out a personal loan, you will generally be able to choose from a fixed or variable interest payment.

  • With a fixed interest rate, the interest payment will not change during the term, so you know in advance exactly what the term will be, how much you will have to pay in installments and interest each month and what the final loan costs will be.
  • With a variable interest rate, the interest rate can rise or fall on a monthly basis, so that you never know exactly when your personal loan has been repaid and what the final loan costs will be.

The duration of a personal loan

By taking out a personal loan, you commit yourself for a fixed term to a contract and you commit yourself to meet the payment obligations. The period that your personal loan runs is also called the term. Because the course of a personal loan is already fixed in advance, the term is already known at that time. So you know exactly when you have paid off your debt in full.

The duration of a (personal) loan depends on a number of aspects, such as:

  • the amount of the loan,
  • the amount of the periodic repayment terms,
  • the interest payment that must be paid on the loan amount.

Often, if you want to take out a personal loan, you can also indicate your preferred duration. After all, by means of the term you can determine the period over which you want to spread the borrowing costs. A longer term therefore means that you can divide these costs into smaller parts, but you will incur more interest costs. A shorter duration, on the other hand, will increase your monthly costs and therefore provide less financial leeway. The interest payment, and therefore also the final borrowing costs, will be lower in the latter case.

Take out an affordable personal loan

Take out an affordable personal loan

The moment you want to enjoy the most favorable interest on your personal loan, it is best to compare the interest rates and other borrowing costs of multiple loans from multiple credit providers. Preferably, you look at the borrowing costs that you will have to pay on an annual basis and whether the conditions of the personal loan match your personal and financial situation.

To find the most advantageous personal loan, you can take different paths, such as:

  • collect personal information from various financial institutions that provide personal loans. This is usually very time-consuming and cumbersome.
  • collect information by telephone or e-mail from various financial institutions that offer personal loans. Although this is less time-consuming, you will still have to put a lot of energy into it.
  • perform an online simulation on the websites of several financial institutions that provide personal loans. You will then automatically be provided with all necessary information about a loan.
  • request an online quote on the websites of multiple financial institutions that offer personal loans. You can then put the tenders side by side and choose the most favorable ones.

In an increasing number of cases, after performing an online simulation or requesting an online quote, you can immediately send a final application for the personal loan that you think is the most beneficial.

Borrow from a reliable credit provider

Nowadays there are a large number of credit providers active who would like to offer you a personal loan. If you have to believe the sales pitch of these providers, they are all the cheapest, but above all the most reliable, that you can find. Unfortunately, this is not true in all cases.

For that reason, it is very wise, before taking out a personal loan, to check whether you are going to do business with a reliable party. You can do this by looking on the internet for customer reviews and reviews that relate to a certain financial institution and / or a certain product. Such assessments will, after all, be much more objective than the attractive advertisements of a lender and will also reveal the disadvantages.

By entering the name of a particular provider of loans and credits in an online search engine, you will soon find out if it is safe to work with this party if you are in financial need. A rogue lender, with high borrowing costs and unreasonable conditions or stories that are too good to be true, is in that case the last thing you are waiting for.

Don’t unnecessarily borrow a lot of money

Once you have found a suitable personal loan from a reliable provider, the temptation may be to borrow more money than you actually need for the intended loan target. For example, you can go shopping for a day without having to worry about the price tags, or buy that hip cell phone that you would otherwise have to save for months.

An unnecessarily high loan also means that you need a longer period to repay the debt and therefore also have to pay more interest. For this reason, the final borrowing costs, just like the monthly repayment terms, can then rise sharply. Borrowing more money can therefore make it difficult for you to make ends meet for the duration of the loan. In the worst case scenario, a loan that is too large can even help you end up in financial difficulties, for example due to the inability to meet certain payment obligations.

No unnecessary long term with a personal loan

Repaying a personal loan in installments does not actually mean that the borrowing costs will be distributed in smaller pieces. Instead of making your purchase or payment in one go, you thus divide the costs over a longer period. During the term of a personal loan you will then have contractually committed to the predetermined payment obligations.

The longer the duration of a personal loan, the more periodic repayment terms will be available and the more interest must be paid on the outstanding debt. The final borrowing costs of the personal loan will then increase considerably. On the other hand, every month you have more leeway within your budget. Before you choose a term, you must also carefully consider what you prefer, but also what you can gain the most. After all, there must be a good balance between these two aspects in order to prevent financial problems in the future as much as possible.

In addition, if you choose an unnecessarily long term, you run the risk that your loan target is already outdated or even worn out when you are still working on paying off the personal loan. The term of a personal loan must therefore always be in proportion to the loan target you have in mind.

Simulation of a personal loan

To get a good picture of the personal loan you want to take out in advance, you can perform an online simulation with more and more credit providers. This is a fast method that can show you exactly where you stand when you take out a certain loan form with the credit provider of your choice.

An online simulator for a personal loan is actually a small help program on the website of a lender. By providing the requested personal and financial details, you will automatically be shown the most advantageous loan options. You can of course carry out several simulations (of various types of loans and several providers) before you finalize a loan request to find the most favorable personal loan for your personal situation.

Data that you need to keep at hand when performing the simulation include:

  • your personal information,
  • your income data,
  • an overview of your fixed costs,
  • personal and financial details of a possible partner.

Request a quote

Requesting multiple quotes (preferably with different credit providers) can quickly give you clarity about the conditions and rates that are applied. In other words: by comparing quotes, you can easily find the most advantageous personal loan for your personal situation. Requesting a quote today is usually a piece of cake.

Most providers of personal loans offer their potential customers the opportunity to request quotes online. Often you can even do a simulation for the loan you had in mind prior to the request for quotation. You actually already know where you stand at the conclusion so that the quotation will only be an official confirmation.

To make a request for quotation, enter a number of requested personal and financial details just like with the simulation. The credit provider will then send you a quote and you are free to accept it or not. However, you must take into account the fact that a quote is only valid temporarily. After the end date has elapsed, you will therefore have to request a new quotation again.

Apply for a personal loan

Apply for a personal loan

The moment you have found an affordable personal loan from a provider that has also earned your trust, then it is time to definitively apply for this loan. Requesting, as well as performing a simulation and requesting a quote, is fairly easy. Nowadays you can easily arrange this online more and more often.

Once again, when applying for a personal loan, all kinds of personal and financial details are requested from you and any partner. But now you also have to send some proof to substantiate this data. With this you can think of:

  • a proof of identity or passport to establish that you are indeed the person you say you are,
  • prove payslips or other income to prove that you actually have the means to repay the loan,
  • proof of fixed expenses, for example of a maintenance obligation or a debt.

Based on the information provided, the credit provider can assess, together with a check at the CKP, whether you have sufficient repayment capacity and can therefore repay the borrowed money without any problems. However, because a check at the CKP usually also has to be carried out, the processing of your loan application can take a few weeks.

Repay a personal loan

Money that you have borrowed must ultimately also be repaid. That is no different for a personal loan. Moreover, the lender will not only want to receive the loan back, but will also charge an interest payment on the outstanding debt. You can see this interest as a kind of compensation for lending the money and taking a certain financial risk by providing the loan.

In most cases this means that you pay a certain amount in installments each month with a portion of interest on it. As the repayment of the personal loan progresses, the repayment portion will increase and the interest portion ( which is a percentage of the outstanding debt ) will decrease. This is mainly due to the fact that most personal loans are taken out at a fixed interest rate. The interest rate will therefore not change during the term due to interest rate drops or increases. Because of this certainty you usually know in advance what you must pay as a periodic repayment and when your full debt will be repaid.

Consequences of a personal loan

By taking out a personal loan, you will:

  • (temporarily) get more financial leeway,
  • can make a payment or purchase,
  • you commit yourself to payment obligations for the duration of the term.

Borrowing money in this way has both advantages and disadvantages. After all, a personal loan will enable you to make payments that you could not make from your own resources. In addition, because of this loan you will have less money to spend each month for a certain time because you have to meet the repayment obligations. It may even happen that you end up tighter in order to be able to meet the periodic repayments. In certain cases you may even have to deny yourself a number of things due to the outstanding debt, such as a holiday or an evening out with friends. You can only spend money that you receive on a monthly basis.

Another consequence of taking out a personal loan is that this debt will be listed at the CKP. This registration can in turn have consequences if you want to take out another loan. Too high a debt does not only entail financial risks for you, but also for the people or companies that have lent you money.

Being unable to pay off a personal loan

Being unable to pay off a personal loan

Most people know that borrowing money, and therefore taking out a personal loan, is not free. Yet the impact of a loan is still often underestimated. As a result, there is a real chance that loans and / or other payment obligations can no longer be met. In the beginning you will probably try to close one financial gap with the other. For example, payments are deferred in order to be able to meet other financial obligations.

However, in the end things can go completely wrong and you can no longer pay off the personal loan. The lender will then send you a number of payment reminders and reminders to still move you to meet your obligations. Certain costs for your payment arrears will usually be charged on top of the outstanding debt.

If the payments are still not made, the lender will pass on your case to a bailiff. This bailiff will also first try to make a payment arrangement with you. Of course, the bailiff will also charge you for his work, which you must pay in addition to the debt that you still have. If you are still unable to pay off this, in the meantime substantially increased, debt, your income or assets will be seized to be able to repay (part of) the debt and all additional costs. The closed personal loan has therefore put you in the drip due to the rain.

Registration at the CKP

In our country it is legally required to report all loans and credits from 1000 USD and / or a term of three months to the CKP. The CKP will accurately keep the data of these loans and the relevant borrowers in a database. It is also recorded whether there are payment arrears or non-payment.

Before you receive a personal loan, every lender will be obliged to check whether you are listed at the CKP and what your loan history looks like. The moment that you have already borrowed too much money, or even belong to the arrears or defaulters, the financial risk for the lender has become much greater. The chance that you will receive a (personal) loan will then be nil because it is very important for the loan provider that you can repay the loan amount without any problems. By registering with the CKP, the borrower is therefore also protected. If the accrued debt has become too high, you simply cannot borrow any more money. This would not only be very unwise, but you could also delve deeper into the financial misery.

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