1. Rental purchase – In the case of rental purchase you rent a product for a fixed amount per month with the intention of taking over this at the end of the term. At the end of the term, the product will come into your possession. Before that time the product is in the possession of the lessor. The advantage of this is that you can enter into this form of consumer credit without being registered with the BKR. Insurance and maintenance are also usually the responsibility of the lessor.
2. Mini loan
This small consumer credit speaks for itself. Within a short duration of usually a few weeks to months you can borrow a small amount at a high interest rate. Due to the low loan amount, the costs are usually low. It is always important to check this form of loan for extra costs. Guarantee is one of the additional costs that must be covered.
3. Personal loan
This is the most common form of consumer credit. One gets a one-off sum of money on which a fixed interest is charged during a fixed period. Ideal when you know exactly how much you need and what you want to use it for. A disadvantage is that interest rates do not fall once the financial market develops more favorably.
4. Revolving credit
The second most popular form of consumer credit is the so-called revolving credit. Unlike the personal loan, you can take out credit in parts at a flexible interest rate. The disadvantage here is that interest rates can rise as soon as interest rates rise internationally. It is therefore a somewhat uncertain loan form, but can come in handy if you need money. If the interest is too expensive for you, you can transfer this credit to a cheaper provider.
5. Purchase on installment
As soon as you make an installment purchase, the product (eg a laptop) is directly your property, but you can pay the amount due in installments. So you take out a loan with a lender and you are registered with the BKR. If you are not creditworthy then you can unfortunately not do this form of borrowing.
6. Current account – This is the least advantageous form of consumer credit because the interest is often high. This loan form is also popularly called red. How far you can stand red is determined in advance by you and your Esther Summerson. This can come in handy with unforeseen (exorbitant) expenses.
Which consumer credit suits me?
To be able to answer this question, you must first know what goal you want to achieve with the credit. Do you need a high or low amount and within which period do you think you can pay off the total credit? Your current BKR coding also plays a role. Once you have this clear, you can focus on the most obvious options.
If you want to take out a large loan, it is wisdom to be able to enjoy the lowest possible interest. If you want to take out a small loan, pay attention to the extra closing costs that a lender charges to their customers.
If you do not intend to apply for a loan at all, then the only option left is hire-purchase. Unfortunately, you cannot purchase all products on the market through a lease-purchase contract.
The Consumer Credit Code of Conduct has been created to avoid over-crediting. This ensures that consumers do not unnecessarily work themselves into debt, which means they may end up in financial difficulties. So be critical and determine what is realistic in your situation.
Unfortunately it is no longer possible to deduct the interest from one of the above loans from the tax (source). One of the reasons for the abolition in 2001 had to do with making a loan too low.
It should not be intended that it is beneficial to take out a loan. This would encourage consumers to apply for a loan and that is not ideal. It can get people into trouble sooner.
The only form of borrowing that is currently deductible is a loan (mortgage) on a home. This deductibility is currently being reduced.
Consumer credit is used primarily as a term among employees in financial services. People who work at an Esther Summerson, insurer or investment company are good examples.
These people also have to take exams in this subject. Well-known course and training bodies such as the LOI offer these among others. The Financial Supervision Act (Wft) requires this before they can practice their profession in that sector.