A personal loan refers to an installment loan and both terms can be used by banks to present their financial product. It is often preferred by lenders to use the term personal loan. The term loan on installment is also referred to because money is borrowed and repaid within a certain period with fixed monthly amounts, including costs. There are several features that distinguish personal loans from other available credits.
Simulate your loan
What amount do you want to borrow?
What payment term do you want? (months)
A pre-agreed amount is lent by the lender, whereby it is clear when the loan must be paid off. The period in which this must be done is called the term . Interest is charged and monthly such an amount is repaid that there is no outstanding debt at the end of the term.
• Loan sum available in one go
• Fixed term
• Monthly installment
• Repayment and interest
• No collateral
The costs associated with the personal loan are expressed in APRs , which stands for the annual cost percentage. The annual cost percentage is calculated in advance over the total loan period and added to the loan sum. The repayment of the loan then consists of part of the loan sum and part of the APR.
The guidelines for a personal loan are laid down by the FPS Economy in the Consumer Credit Act. An installment loan is always a standardized financial product . The loan is mainly taken out to use for personal purposes, such as buying a car or purchasing a washing machine. There is no need to account for the use of the loan amount to the bank or lender.
There is no collateral, because the application for such a loan as described above is assessed on the basis of a number of factors. This concerns disposable income , but also the existence of a possible debt burden and the credit history of the person applying for the loan. A credit profile is drawn up of the applicant and on the basis of this the assessment can be made and a decision can be made to grant an installment loan.
The creditworthiness check is important, because this is how the bank knows whether the applicant is able to repay the debts. Moreover, the consumer is also protected in this way by not borrowing more money than is considered financially possible. It is not wise to borrow more money than can be financially supported. In addition, the bank wants to be sure that the money will also be repaid.
The APR basis is generally used as standard to determine the interest. This way, all costs can be conveniently combined into a single percentage. The costs of the credit include commission, administration costs and bank interest.