Borrowing money is now easier than ever.
Many people may not agree with this because banks and other lenders have become much stricter than before.
That is true, but on the other hand, the supply of credit forms has increased considerably. Moreover, nowadays you can simply submit a credit application from home where this was of course not possible in the past. The enormous range of opportunities to borrow money has as a direct consequence that we also do it much more often, even when it is actually not necessary at all. Are you planning to borrow money, but do you want to be sure that you do it in a truly responsible way? In that case it is certainly important to take into account the five important tips from this blog article.
Tip 1: Only borrow when that is interesting
It is good that different types of credit can be found on the financial market. If there are no possibilities to finance a large purchase or investment, it would be impossible for many people to buy a car or a house, for example. Despite the fact that a car is basically lost capital (your investment theoretically declines every day in value to often never rise again), taking out a car loan is definitely worth it. This way you do not have to touch your hard-earned savings while you still have the opportunity to purchase a truly qualitative and beautiful-looking car.
The above is of course not only valid for the purchase of a car, but also for real estate. Almost no one in Belgium has the opportunity to buy a house or apartment for 100% with own resources. Moreover, it can be established that people who may have this option may still take out a mortgage loan. How did that happen? Very simple. It is never a good idea to put your entire available capital in one big investment, even when it concerns real estate. In addition, there is also the residential bonus that ensures that people who take out a mortgage loan can count on an attractive tax benefit.
The above makes it clear that in various situations it is certainly worthwhile to take out a loan. On the other hand, it is often not at all. For example, what about the moment when people choose to buy three televisions to spread over their homes and they take out a consumer credit for that? In this way you have the possibility to get your three desired television sets, but an interesting investment is this in the least.
Tip 2: Prepare for yourself what amount you can pay monthly
Banks today are very strict in determining the repayment capacity available to their clients. This does not detract from the fact that it is also important for you to determine how much money you can miss each month, regardless of your potential lender. In doing so, several factors must be taken into account, namely:
- Any rent that needs to be paid;
- The fixed costs in the form of gas, electricity and water;
- Possible current savings contracts and / or insurances with fixed costs;
- Other existing credits or debts;
- The required reserve for paying other costs such as groceries;
By taking into account the above five factors, it is already possible to decide for yourself how high or how low your monthly repayment capacity is. However, preferably keep an extra margin, because unforeseen events can always arise. Is that the case? Then you will want to have a little savings on hand to also be able to pay these costs.
Tip 3: Do not borrow more than necessary
The third tip is also a very important one. The fact that you might be able to borrow more
then you need it strictly speaking does not necessarily mean that this is also interesting, on the contrary. It is indeed correct that you have to make sure that you have some extra financial breathing space yourself, but borrowing more money always means paying higher costs. Therefore, try to decide for yourself how much financial margin is required for your purchase or investment. Please note that in most cases it is only possible to borrow a maximum of 100% when investing in a new car in particular.
Tip 4: Use a short, but feasible repayment term
The repayment term of your loan is decisive for the final costs you will have to pay, but also for the payment comfort you have. In practice, a short installment period will always ensure that your loan is accompanied by the lowest possible costs. On the other hand, you will have to pay a considerable amount every month again. Does something go wrong and you have not kept a sufficient margin for your payments? Then you can immediately be confronted with a lot of extra costs. As a result, your credit will become a lot more expensive in one go than if you had just opted for a slightly longer installment.
Tip 5: Compare credits with different providers!
Before closing a loan, it is always a good idea to compare the various options and the associated costs with various lenders. You have to provide a little bit of time for it, but at the end of the ride you will be able to determine that you can save a lot of money.