Who takes out a loan at the right time can save a lot of money. But how deeply does the price tag drop when a private lender changes the rates?
Those who want to renovate a home, or have a beautiful car in mind, can turn to a private for a loan. But when such purchases are not urgent, it may be interesting to defer such a loan. For example, it can be lucrative to wait until the motor show when you want to take out a car loan.
Some private lenders, then firmly cut interest on a car loan. The private lender remains the cheapest player in terms of car loans to this day. Renovators can then do the gold business again during an event. But how much can you save if you take out a loan at the right time?
Biggest drops with renovation loans
In the past year, we have seen the largest landslides on the renovation loans market. Last February, some private lenders significantly reduced the rates. Some have since maintained or even reduced the rates.
One of those private lenders who cut interest in a renovation loan is local banks. Anyone who took out such a loan with the large private lender earlier this year paid 2.95 percent interest. Whoever does that today pays 2.7 percent, or 25 basis points less.
How large is the saving?
But how much exactly do you save? Suppose you borrowed 10,000 dollars a few months ago and repay that amount within 48 months, you have to pay 220.95 dollars a month.
The private lender then pays a total of 605.6 dollars in interest. Anyone taking out the same loan today pays 219.87 dollars a month. That may seem like a negligible difference, but at the end of the journey, you will save 51.93 dollars.
The more you borrow, the greater the saving. For example, those who borrowed 20,000 dollars (in 60 months) when the rate was still 2.95 percent pay 358.58 dollars each month, or the private lender owes a total of 1514.8 dollars in interest.
Anyone taking out the same loan today pays 356.42 dollars a month. Of that amount, 1385.20 dollars flow to the register of the private lender. That means you save 139.6 dollars in that case.
Biggest differences with a private lender loan
The differences become even more striking when we look at the reductions that private lenders implemented earlier this year. At the start of this year, you paid 6.4 percent interest when you took out a renovation loan with the private lender of the Belgian postal company. Today that is 2.99 percent. This puts the private lender in the middle bracket.
The saving compared to a year ago is indeed huge. For example, anyone who today borrows 15,000 dollars from the private lender and repays that amount within 60 months pays 269.19 dollars a month.
At the end of the ride, a private lender is 1151.40 dollars richer. Anyone who took out a loan when the rate was still set at 6.4 percent pays 291.53 dollars a month, or the private lender owes 2491.8 dollars in interest. That is a difference of 1340 dollars.