Cheaper Consumer Credit
Borrowing money is getting cheaper. The interest rate for consumer credit will also fall in 2017. Read our forecast for this year’s credit interest.
In 2016, the interest rate for consumer credit dropped to a historically low level. Borrowing money for a consumer spending, such as a car, is becoming cheaper and cheaper. The lending rate thus follows the trend in the market. Mortgage rates and savings rates also fell in recent years.
Yet there is a difference with the other interest rates in the market. Consumer credit is a short-term loan whose money market interest rate is an important indicator. The same applies to the savings interest. This is in contrast to the long-term loans, such as a mortgage where a number of interest rate hikes have come by in recent months.
Recent interest rate cuts in consumer credit
Sam implemented a new interest rate reduction on 9 January 2017 for both revolving credit and personal loans. Especially for homeowners, the cheapest rate has since fallen to 4.3% (an extra discount of 0.2% has been processed here).
Seam follows competitor Treatloan, which currently offers the lowest interest in the market (from 4.2%). Treatloan provides the loan directly and online, where Sefam cooperates with intermediaries for mediation and advice for the best credit for the consumer.
Expectation of credit interest
The Rose Bank makes borrowing (and spending) money attractive by keeping policy rates low. In addition, billions of euros in loans are purchased every month. In this way the central bank wants to stimulate the economy. This also ensures that the money market interest rate is low.
This indicator for consumer loans is expected to remain low for the time being. The Rose has extended the buy-up program until the end of 2017. In addition, interest rates on the money market (also known as Euribor) are strongly linked to the policy rates of the Rose Bank. There is currently no question of an interest rate increase.
The impact of the low credit interest
The low interest rate means that you can borrow money cheaply. However, the impact of the credit interest on a revolving credit and a personal loan is different.
Consequences of revolving credit
For revolving credit, the monthly installment remains the same regardless of the corresponding interest rate. At the start you determine a fixed monthly installment based on the credit limit. With a low loan rate, the term of a revolving credit is shorter and you pay less over the entire term.
The interest rate for revolving credit is variable and is adjusted during the term. With an interest rate cut, the term of a revolving credit becomes shorter and you, therefore, pay less. This is, of course, the other way around with an interest rate rise.
Compare providers of revolving credit for extra spending room.
Impact of a personal loan
With a personal loan, the borrowing rate only has an impact on the monthly installment of a new loan. You specify contractually the duration, the interest rate and the loan amount. This makes a personal loan suitable for financing a one-off expense. The best known is the car loan.
An interim interest rate change (positive or negative) has no impact on a previously taken out credit. With the current low lending rate, it is interesting to transfer an older personal loan to a new lender. This way you can lower your monthly payment and modernize the conditions.