Are you planning to take out a quick credit, for example to buy a new car or a washing machine? Then take the following criteria into account, since they largely determine whether it is wise to take out the loan. A personal loan or a revolving credit can be a great choice to finance your purchase, provided you ensure that the various criteria are consistent with each other.
Interest rate and term
Obviously take a good look at the interest rate and the term. The moment you take out a personal credit with an interest rate of 7% per year, this basically means that you incur 7% annual costs, compared to a few percent interest that you could have received if you had started saving. For example, a purchase of $ 1,000 with an interest rate of 7% will cost you $ 1,070 after a year. The exact costs of a loan depend on the repayment and the duration. Choose the term preferably not too long, since the costs of the loan as a whole will increase further in this way. On the other hand, do not choose the duration too short, since the repayment may then become unrealistic.
Structure of the repayment
In addition, look carefully at the structure of the repayment. Do you opt for a personal loan? Then you make agreements in advance about the repayments that you will make each month, so that the debt is properly repaid at the end of the term. Do you opt for a revolving credit? Bear in mind that the repaid amounts can be withdrawn, so that the structure is less structured. In the case of a mortgage loan, you can even opt for an annuity repayment, with repayments gradually increasing, at the expense of the monthly interest amount.
Lifetime of the product
In any case, try to ensure that the quick credit does not run longer than the expected lifetime of a certain product. For example, are you buying a television? Keep in mind that it can break after 4-5 years or even have to be replaced due to the outdated technology. The moment your duration is longer than the lifetime, you continue to pay for a product that you no longer have. Moreover, it is a lot harder to borrow money again for a new purchase.