Consumers who do not have enough (saving) money to make larger spending can apply to borrow money. But as we all know: borrowing money costs money. So whoever wants to borrow money, prefers not to spend the night and is well informed about the risks.
In this article, we provide tips for borrowing money as responsibly as possible.
Tips for responsible lending
The very best tip we can give: take the time to think carefully about your decision. Entering into financing does not have to be bad at all, provided you take a good look at the future and your options.
There are many aspects to borrowing money, such as the term, the amount of the loan, interest, the monthly amount of the repayment, additional repayment and any life insurance. That is why it is important to have a clear picture of which type of loan best suits your situation and loan objective. Borrowing money is by definition a decision for the longer term.
Be realistic about your personal situation and any changes. Taking out a loan means that you must also pay it off; within a few years. What does that mean for your personal situation? Do you perhaps have plans to relocate, is a child on the way, will you soon lose your job or are you going to work more? Can you continue to bear the monthly payment of the repayment at any time? Responsible lending means that you look at your situation with realistic glasses and take into account (financial) changes.
Learn to save
That probably sounds a bit strange for those who want to borrow money because there is currently no own money in the house. But: ‘whoever cannot save must not borrow’ is meant by this tip. The idea behind this: if it is already not possible to set aside an amount every month, how difficult will it be to meet the financial obligation of paying off the loan every month?
Duration versus user enjoyment. Are you taking out a loan to pay for a car or an exotic trip around the world? Make sure that the term of the loan does not exceed the period in which you use the car or go on holiday. Otherwise, you are still paying while the car/telephone/boat has long been sold or used up.
Or even worse: your world trip was already completed 2 years ago, but the beautiful memories have since been overtaken by debilitating monthly payments. And of course, the following applies: is the desired purchase really necessary or more an emotion or impulse purchase?
Avoid an extra BKR registration as much as possible. Anyone taking out a loan in excess of 250 euros is registered with the BKR. That is not a problem in itself. However, as soon as payment arrears arise, you will receive a negative registration that will remain for 5 years. Disastrous for those who, for example, want to buy a home: you cannot take out a mortgage.
Compare loans. Once you have determined that you can bear the monthly costs of a loan, it is time for the next step: compare loans. With us, you get in 1 overview an offer from 5 banks, in which all conditions are set out. That way you can compare loans. One loan is not the other, so it is important to know where you can best take out a loan and which conditions the best suit your situation. The Goodbank has a handy checklist for this.
What can you pay attention to:
- Is the lender registered with the AFM? Or: is the case legal?
- Request multiple quotes. What are the relationships between the interest, duration and the total amount of the loan? Is a fixed interest rate or a flexible interest rate more convenient for you?
- What do the fine print/conditions say? Can you repay the loan early without penalty? What do the conditions for disability, unexpected high healthcare costs or even death say in the conditions? Can / should you take out a life insurance policy? All these conditions are at least as important as a good interest rate.
If you want to borrow money, it is wise to be careful and to take the long term into account. A rush is rarely good and certainly not when it comes to money.
After careful consideration, have you decided that a loan suits your personal situation and your longer-term plans? Request a free quote here and receive a realistic offer from 5 banks in 1 overview. The better you can compare loans, the better prepared you will be.