Personal loan: Good to know
1: What is a personal loan?
A personal loan is a type of loan in which the loan amount, the term and the interest are fixed in advance. If you are going to take out a personal loan, you will receive the loan amount once in your account and you repay a fixed amount each month. With a personal loan you know exactly where you stand, which ensures peace of mind for large purchases. The chance is small that you will be faced with unpleasant surprises with a personal loan.
Personal loan characteristics
These are the characteristics of a personal loan:
- The interest rate is fixed
- You repay a fixed amount per month
- The duration of the personal loan is between 6 and 120 months
- Your term (repayment period) is fixed
- You will receive the loan amount in one go on your account
- You borrow a fixed amount
- You can often repay additional fine without penalty
2: Conditions for a personal loan
The loan amount, interest and duration are therefore all fixed with a personal loan. These have been agreed with the lender and are included in your loan contract. You must therefore adhere to this. In addition, a personal loan has other conditions, such as:
- Repaid amounts can no longer be withdrawn. Do you want this? Then have a look at the revolving credit.
- Changing the loan amount or the term is not possible in between. For this you have to refinance the loan. Of course this has an impact on interest and repayment.
- Your contract will be terminated automatically once the personal loan has been paid off.
- Under certain circumstances, the lender terminates your contract early and claims the outstanding debt. These circumstances differ per provider, but usually amount to payment arrears and bankruptcy.
3: Repay your personal loan
Do you receive holiday pay or a bonus? Then use this to repay your personal loan. You thereby shorten the duration, so you pay less interest and therefore save a lot of money. In our comparison you immediately see whether you can repay the personal loan without penalty.
4: Personal loan interest deductible?
Do you use the personal loan for a renovation or improvement to your home? Then the interest on this is deductible from income tax. This is only allowed with loan types where you pay off monthly, which is the case with a personal loan. With a revolving credit, the interest is therefore not deductible. This considerably lowers your costs!
5: Advantages and disadvantages of a personal loan
To summarize everything for you, we list the advantages and disadvantages of a personal loan for you:
Benefits personal loan:
- The amount is deposited in one go
- The interest rate is fixed and does not change due to market fluctuations
- Clearly arranged by fixed monthly charges
- You know when you have finished paying
- Interest is deductible when renovating
Cons personal loan
- Loan amount and term cannot be adjusted in the meantime
- Extra repayments can sometimes result in a fine
- You do not reimburse repaid amounts if your loan target unexpectedly turns out to be more expensive