If you borrow money from bank, you pay a fixed amount for it every month. This amount consists of a part repayment and a part interest. By repaying, you repay the loan.
Why are there interest rate differences?
With us you can take out 2 types of loans: a personal loan and a revolving credit.
1. A personal loan: security
With a personal loan, we already make agreements at the start of the loan about the interest and repayment amount that you pay. The interest rate therefore remains unchanged. We can therefore indicate exactly what the term of your loan is.
2. A revolving credit: flexibility
With a revolving credit, we make agreements at the start of the loan on the total amount that you repay to us each month. The exact interest and repayment amount per month depends on the interest rate that we calculate. With a continuous credit this percentage is variable. Will the interest rate be higher?
Then you pay more interest and less repayment. The term of your loan will then be longer. Will the interest rate be lower? Then you pay less interest and more repayment. The term of your loan will then be shorter, provided that you do not make any further withdrawals.
Variable interest under the microscope
The interest consists of various parts:
- a reimbursement of the costs that we must incur ourselves to purchase money (funding costs)
- a compensation for the risk that customers do not reimburse us (the risk premium)
- a reimbursement of our costs
- a remuneration for our shareholder for making capital available (the profit premium)
If one of these parts changes, we can change the interest. The most important variables are the funding costs and the risk premium. These are explained below.
Revolving loans are always financed on the money market for short periods of several months. That is because you can withdraw money when you want (up to the credit limit) and because you can repay when and as much as you want. You can even terminate your continuous credit at any time free of charge. The flexible nature of revolving loans leads to variable funding costs.
Our revolving loans are largely financed by our parent company, which raises money on the interbank money market. In addition to a basic interest rate (a weighted average of the one, two and three-month rates), our parent company also pays a liquidity surcharge for these funds.
This is higher for low-quality loans than for medium or high-quality loans. The higher the basic interest rate or the liquidity surcharge, the higher our funding costs and the higher your variable interest rate.
The risk premium depends on the credit risk that we run when providing the credit. This credit risk is based, among other things, on your personal financial situation and your family situation. Based on this, you are classified in a certain risk class when applying for a loan. In addition, the amount of the risk premium depends on the amount of the credit. The payment behavior of other customers in your risk category can also lead to a change in interest rates.
Can I withdraw or redeem additional money?
From a Continuous Credit you can withdraw extra money up to the agreed limit and you can repay (free of charge) when it suits you best. You cannot withdraw money from a personal loan, but you can repay extra free of charge.
Can I increase or decrease my loan amount?
Do you want to increase your loan amount? Then you can apply for a new loan. We then assess whether you qualify for this higher amount. Do you want to lower your loan amount with your revolving credit? Then you can submit a request for this via the contact form.
Can I merge existing loans into one (transfer)?
Do you already have loans (overdraft, credit card debt, mail order credit, loan from another company) and do you want to merge this into one comprehensive loan with a competitive interest rate? State this when you apply for a loan. Who knows, you can save on your installment amount.
When does my loan end?
- Have you repaid your personal loan? Then we will terminate this loan immediately.
- Have you repaid your revolving credit? Then we terminate this loan one year later. A condition for this is that you have not withdrawn money in that year. In that year you will still be registered with the Credit Registration Office (BKR), unless you yourself have indicated that you wish to terminate the loan immediately. If you have repaid everything with a revolving credit and you want to terminate your loan immediately, you can do so via the contact form.