Everyone knows in a situation where a loan would come in handy. It may be a smaller amount, such as a holiday, a new television or just because you are tight this month. It can also be (much) larger amounts. Think of a student loan, the renovation of your apartment or buying a new house. So there are just as many loans as there are loan goals. But what is the amount that you can borrow and pay off?
Choose the cheapest provider for your loan
The question ‘What can I borrow’ is a lot easier to answer than you may have thought. Lenders currently provide loans at very competitive interest rates and borrowing costs. The interest on debts is very low and with all those providers in the market there is a lot of competition. They mainly compete with each other on the annual percentage rate (APR) – the interest together with the borrowing costs. And that’s good for you, because that way you can choose the cheapest provider for your loan.
You may want to take out a loan to renovate your home. Then you are currently eligible for government premiums. They are mainly aimed at reducing your energy consumption, such as replacing the old fuel oil heater with one based on natural gas. Or insulate your roof and walls, install double glazing and even more. So you not only save on your energy bill, you often also get money for your investment. And that’s a nice bonus, because let’s face it: everyone would rather have more money left at the end of the month.
Find out where the cheapest loan
To find out where the cheapest loan can be obtained, it is a good idea to compare a number of providers. You can do that by having a chat with banks and lenders, but it takes a lot of time. It is easier to log in to your laptop and do the comparisons online. Almost every provider has a simulation tool with which you can calculate your monthly payments. The simulations are free and you can do it as often – with different amounts – as you want. So you can very precisely look for the limit of what you can pay off each month.
Note the following in a simulation: the amounts are divided into ‘disks’. Each disk has its own cost percentage. For a small amount you often pay a higher percentage of borrowing costs than for a larger amount. Suppose you need a loan of 500 USD that you pay off in 3 months. You may then pay more monthly costs for the loan than a slightly larger amount. For example, sometimes it is handy to borrow 800 USD in 4 months. It is possible that you will end up in a different disk and you may end up paying less. Your question ‘What can I borrow’ could suddenly be a higher amount for less money. Nice right?