With a consumer credit you borrow an amount of money with the aim of consumer spending. For example, you want to buy a car or a boat or you need a little more financial space. You can take out different types of loans that fall under consumer credit.
The definition of a consumer credit is as follows: “A loan taken out by a consumer for the purchase of movable property or services.” In this case, movable property means buying a car, paying for a vacation or a study. For a consumer credit you go to a bank, so you have to know how much I can borrow or you have to determine the credit amount. It is not and not even advisable that you should actually borrow the maximum amount that you can borrow. Only borrow the amount you need, this will save you a lot of costs.
When determining the credit sum you have to deal with 2 options. There is a fixed and a variable credit sum. With the variable credit sum, a credit limit will also be set, this is the maximum amount that you can borrow.
If you take out a consumer credit, you will pay interest on it. It is therefore wise to compare the interest rates of the different lenders. Take the time for this, because there may just be a difference in the interest rate of a few percent between the lenders.
If you are going to take out a consumer credit, you will have to pay interest on it. With interest, make sure that you are dealing with a nominal interest rate and an effective interest rate. The effective interest rate is always slightly higher than the nominal interest rate. The reason that the effective interest rate is slightly higher is that the calculation takes into account that you will not pay the interest in one go at the end of the year, but that you pay it monthly. The nominal interest rate is actually a fictitious interest rate. You would pay this interest if you paid interest once a year and there were no monthly transaction costs.
There are two types of consumer credit: the expiring consumer credit and you have to think of the personal loan. The reason that this is referred to as a expiring consumer credit is that you agree with this loan on a term in which the loan must be paid back. Everything that you have repaid can no longer be recorded. With a personal loan, the duration and interest are fixed.
And the second consumer credit is the revolving credit. With revolving credit it is different, with this loan form you agree a credit limit with the lender. This is the maximum amount that you can borrow. You are also free in how much you borrow (up to the credit limit) and when you pay it back. You can pay early with the revolving credit. If you want to withdraw the repaid amounts then that is no problem with the revolving credit. With this loan form there is also only a theoretical duration. This term would exist if the interest does not change and you no longer withdraw amounts and you do not repay anything earlier.
If you decide to apply for a consumer loan, the first thing you should ask yourself is how much can I borrow? And which loan form I will use for this. Will I take out a personal loan or a revolving credit. Then you compare the lenders who offer these types of loans with each other. You compare both on the interest rates and on the conditions. Because even though the cost of a loan is an important point, the conditions of the loan that you are about to take out are just as important.