The top 10 tips on borrowing money.

Is borrowing money really necessary?

Before you borrow, ask yourself carefully whether it is necessary. People often make purchases that they do not actually need, or for which they can also save. So carefully consider whether it is necessary to purchase the product immediately or whether it is best to wait until you can finance it (almost) completely.

You can also borrow from your family.

It may also be possible to borrow money from family, this can also be much cheaper than borrowing money from a lender. Please note that in some cases this can lead to unwanted situations and arguments.

Make a clear overview.

Make a good overview of what you want and what is on offer. Request multiple quotes for this. This often allows you to see at a glance which loan types meet your needs. Do not go overnight either, it often pays off if you are well informed about what is on offer.

Limited borrowing saves you money.

Don't borrow too generously, but not too tight either. A loan that is too large means that you pay a relatively high interest while in reality you could have been cheaper. A loan that is too small can mean that you have to take out or expand an extra loan, which in turn entails costs. So consider carefully how much money you need.

Compare all interest rates.

Take a good look at the interest rates. Low interest rates are attractive, but being part of a variable interest rate can mean that you can pay much higher interest at a later stage. So carefully consider whether you want to take risks or whether you prefer to know where you stand with a stable interest rate level.

Always read the terms and conditions.

Do not only pay attention to the interest rate, but also ask about other conditions for early repayment and death insurance, for example.

What is the purpose of the loan.

Determine the purpose of the loan: Do you want to finance a large purchase and not worry about the repayment? Then a loan with a fixed amount might be something for you. However, if you want to finance 'smaller' purchases more often but can pay them back quickly, a credit card may be more for you, because you decide when you make the repayment.

Determine term.

Check whether you think it is more important to have more space every month with a longer term or whether you prefer to get rid of your debts as soon as possible. With a shorter term, you must take other fixed costs into account. So make a budget and adjust the type of loan accordingly.

Maturity versus lifetime.

See if the term of the loan matches the life of the product. If you take longer to pay off than you use the product, it will not make you happy. So choose a term that suits the product type.

Mortgage interest.

Note that nowadays you can only deduct the mortgage interest from your (first) home from the tax. Other destinations such as cars, boats and equipment fall under consumer credit and are therefore no longer deductible.

Better prevention than cure.

In the unlikely event that problems arise with the repayment of the credit, call for help in time. For example, consult an advisor who knows a lot about this. This way you can still set the sails and prevent worse.

Borrow cheap money at a low interest rate.

A huge number of lenders nowadays advertise with low interest rates. The interest is then, for example, 2% lower than at a bank. However, providers often 'forget' to state that the stated interest is an action interest. In many cases, this starting interest applies for only one or two months, after which you pay a higher interest. In reality, it does not always have to be cheap to borrow 'cheaply'.

This is why you should pay close attention to a number of things. The monthly repayment and term is one of them. A low interest rate with a longer term does not necessarily have to be more advantageous than a higher interest rate with a shorter term. A low interest rate may be attractive, but do not forget to compare it to the term of the loan. In many cases, cheap loans also include (extra) insurance as part of the loan. In most cases it concerns a so-called term life insurance. You pay extra for this insurance on top of the interest on the loan. With many cheap loans, such extra insurance can be considered mandatory.

As mentioned, many loan providers advertise low interest rates. In many cases it turns out to be only an action interest rate that later turns out to be a variable interest rate, so that after a while you will pay a higher interest rate than was advertised. Many lenders also advertise a special offer, or rather; decoys.

For example, you can receive free gifts, such as a camera or coffee maker, which later turn out not to be free at all. A lender can recoup the gift by charging a higher interest, closing fee, or term life coverage for the loan.

Nowadays you can borrow money cheaply through the mini credit or the mini loan. You then borrow an amount under € 1,000, which you must repay within a month. This is especially useful when you need a small amount within a short period of time and have the money to pay it back quickly. However, a mini-credit does not have to be cheaper as advertised. If you do not pay back within the term, you may pay a high fine or the interest may be quite high.

For your own safety, your payment history will be checked at the BKR. All credits between € 500 and € 12,500 with a minimum term of three months are registered with the BKR. Certain mobile subscriptions are also registered. When you have payment arrears, you will receive a negative BKR listing. It then becomes more difficult to apply for a new loan, to protect you from falling further into debt. Lenders of the cheapest personal loans often do not do a BKR check. This means you are not protected against yourself and you therefore run the risk of falling deep into debt.