More than 6.2 million Belgians had a credit facility open in May 2016, according to the National Bank of Belgium. In this way they finance their own projects and expenses. For some, however, a credit is a source of concern: they are afraid of the financial instability or the debt spiral that could bring debts.
Here are 4 reasons never to say to a loan.
- Personal loans, loans with a specific purpose and mortgage loans are the best options to borrow in the short or long term
Personal loans and loans for specific purposes (car loans, renovation loans, …) can be a good alternative for credit cards to borrow money. These are types of loans that offer the lowest interest rates; it is cheaper than the use of a credit card or another credit outlet. In addition, your monthly payments are fixed, so you know in advance what you will pay, and you will not be surprised.
A mortgage loan is the best way to finance a real estate project. The interest on this loan has also fallen sharply in recent years, which encourages the Belgian to invest.
- A loan can help you if you need cash
If you do not have enough cash to finance a project in the short or long term, a loan can help you. A personal loan is a good way to finance a project or several projects without having to say what exactly you will use the money for. However, loans for specific purposes, such as a car loan or a renovation loan, gives you better interest because you have to justify the loan. With these loans you will protect yourself, as it were, because it prevents you from using the money for other purposes. Because you have a limit, you can avoid uncontrolled expenses and debts.
A mortgage allows you to pay an immovable property with higher value without having to put the entire amount on the table (how much among us can pay a house with savings?). In addition to a few other formalities, the bank will ask you to mortgage the house to guarantee your loan.
- You receive protection during the entire duration of the contract
A loan is a contract that requires careful consideration; luckily you will be protected during the whole “process”.
Before concluding a credit agreement: the creditor must clearly inform you about all aspects, in particular the duration, the amount and the existence of a debt balance and insurance policy. He must provide you with a written document called “SECCI”, which contains all elements of the credit contract. The lender, by the way, has a legal obligation to give advice to the consumer; This can even go so far that the lender has to advise against hiring a loan because it will become too financially heavy.
After the signature: you have a period of 14 days to reflect. Within this period you can decide whether or not to continue the loan.
During the contract: the creditor cannot make any changes to the contract without your permission (with the exception of the interest rate, if clearly stated in the contract). Even if you have the money to repay part of your loan or the entire loan, you can do this. You must notify the lender at least 10 days in advance by registered letter.
- Your insurance can cover you if you are unable to repay your loan
A major concern that often comes into people’s minds is that they will not be able to repay the loan. This is due to unforeseen circumstances such as a divorce, illness, job loss or other.
Some insurance policies can help you with this. For example, you can take out credit insurance with your own bank that covers you against the risk of default and death.
In practice, most banks require you to take out a debt balance insurance policy in order to take out a mortgage loan. In addition, with this type of credit you can also register for additional insurance policies. In Wallonia and Flanders, the government also offers free insurance that covers you when you involuntarily lose your job or are unable to work. These insurances must be taken out shortly after you take out your loan.
Loans can therefore be a very useful way to finance your projects, but only if you use them carefully and intelligently. If you are looking for a loan, do not hesitate to compare all financial institutions to find the loan that suits you best.