Borrowing money, costs money. You often see this passing by and it is just a fact. But how much does it cost to borrow money?
What are the costs of a loan
The cost of a loan is the interest that you have to pay. Repaying a loan is not a cost. You give something back, as it were, which you also received. Nowadays no extra costs may be charged. This improves transparency and you can easily see what the total costs are when you take out a loan.
Different types of loans
The type of loan largely determines how much interest you have to pay. The interest is usually the highest for a mini loan.
A revolving credit and personal loan are cheaper in terms of the interest that you have to pay. And a mortgage is the cheapest type of loan. Which loan is best to take out depends on what you will use the money for.
If you borrow money for a short period then it is not wise to use this money for a large and long-term purchase such as a house.
That the interest for a mortgage is the lowest is because there is a collateral attached to the loan. If the loan cannot be repaid, then a bank has the assurance that in the worst case they can sell the house and thus get their money back.
The interest that you pay for a mortgage is also deductible from income tax under certain conditions. This makes this loan even cheaper.
Historically low interest
The interest rate has been historically low for some time. For the time being it does not look like this interest rate will rise sharply. There are, however, many factors that play a role. So even though it is expected, there is no certainty that this is actually the case. In addition, economic developments can go very fast. And economic developments have a major impact on interest rates.
Current interest rates
At this moment you can find the following interest rates online:
4.6% – 6%
|3.9% – 6%|
|1.15% – 2.2%|