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Personal loan

What is a personal loan?

A personal loan (also called PL) is a type of credit in which almost everything is fixed when taking out the loan: the amount of the loan, the amount of the interest due (fixed interest rate), the repayments and the term of the loan. This automatically means that a personal loan has a fixed monthly charge: the monthly installment. This monthly installment consists of interest and repayment. Interim withdrawal of repaid amounts is not possible with a personal loan - unlike with a revolving credit.

The advantage of the personal loan is that you know exactly where you stand in advance. A personal loan is often chosen when large purchases are financed. Think of car financing or a renovation of your own home . It is important to choose the term of the loan in such a way that the term of the loan is shorter than the (economic) life of the purchased product.

Lowest interest rate personal loan

On this site we keep track of the current interest rates of a large number of lenders . The table below shows the lowest and highest interest rates currently offered by these lenders for various amounts when we look at the personal loan.

Current lowest interest personal loan

loan amount min interest max interest
$ 5,000 6.20% 10.00%
$ 10,000 4.90% 9.90%
$ 25,000 3.60% 8.50%
$ 50,000 3.50% 8.50%
more interest rates personal loan
If you want to compare all current interest rates on borrowing, click here

Main features of the personal loan

We have listed the most important properties of a personal loan below:
  • fixed credit amount. Additional recordings are not possible;
  • fixed monthly interest and repayment, the monthly amount (monthly installment) is fixed;
  • pre-agreed duration;
  • you cannot pay off extra amounts without penalty with multiple lenders;
  • sometimes a term life insurance is included in the loan;
  • the interest paid may be tax deductible .

Rates for a personal loan

A personal loan has a fixed interest . This interest is of course primarily dependent on the market interest rate. This is the interest that the lender has to pay on his money (ie the purchase price for the lender). The higher this market interest rate, the higher the interest on the personal loan. In addition to the market interest rate, however, there are a large number of factors that can determine the level of the interest. We have listed the most important ones below.

Amount of the loan

Often the interest rate becomes lower with a higher loan amount.

Collateral

When there is collateral (eg a house or a car), a much lower rate often applies than with a blank credit. If you use the loan to purchase or improve an owner-occupied home, the interest paid is tax-deductible in certain cases.

Duration

You can often choose from different maturities. It may be the case that the interest may differ per term.

Personal risk profile

The lender often creates a risk profile for each applicant. This takes into account your age, income situation, credit history, outstanding loans, etc. The lower the risk, the sharper the rate.

Additional insurance

With some products, insurance is included in a personal loan. For example, the construction is often used that the loan expires if the borrower (the person who has borrowed the money) dies during the term of the loan. In that case, a term life insurance is attached to the loan. Of course, you often pay a slightly higher interest rate for a loan with such insurance.

The above factors show that not everyone is eligible for the same interest rate! In fact, there can be almost 10% difference between the lowest rate offered and the highest rate! Moreover, not all companies deal with the above variables in the same way. Before you take out a personal loan, it is therefore very wise to make an extensive comparison between the different providers.

Special forms of a personal loan

Credit companies often offer different forms of a personal loan. Below we have listed a number of special shapes. When you have a credit analysis carried out by us, we will include all these forms in our analysis.

Senior loan

Often with a standard personal loan, the loan must be paid off by the time the borrower reaches a certain age. Nowadays, loan products are specially designed for older borrowers in which this final age is extended.

Car financing

The moment someone buys a car, the purchase is often (partly) financed. Car financing is therefore a very often taken out form of credit. Interest rates are often different from blank credits (lower).

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