At a time when banks still have little confidence, it is increasingly being thought of taking out a so-called private loan.
A private loan is a loan where a bank or other financial institution does not provide a loan or a friend or family member. Such a loan is often provided on lax terms, which means that the borrower can borrow money very cheaply. Contrary to what many of us suspect, you as a lender with a private loan are not obliged to charge an interest. It goes without saying that this is usually done, but there are also other possibilities. We would like to tell you more about the interest on a private loan in this article.
Take out a private loan with interest
Let us first look at a private loan where an interest is charged. In this case, the lender will set a certain percentage of the loan amount as cost price. The cost price will be divided over the number of months the loan will run and will usually have a fixed turnover. Characteristic of a private loan is that a fixed amount is usually agreed and the cost price does not fall as the loan is repaid. This may be a small drawback compared to, for example, an ordinary personal loan or another installment loan that is taken out with a bank. On the other hand, the conditions of a private loan are less strict and the cost price is usually lower than with a loan taken out through the regular channels. In that respect, a private loan is and remains very interesting.
Take out a private loan without interest
If the lender is a good friend or a family member who does not need to know the cost price, he can choose to provide a private loan with no interest. You can then choose to simply charge an administrative cost price or use a symbolic cost price of, for example, 1 euro. The fact is that for a private loan, it is not legally valid that profit should be made. However, it is always recommended to record the conditions for the loan in an agreement. It may be a little annoying to ask for this, but only a written agreement is a good basis for any private loan. In this way there can never be protest and good friends will remain good friends in the future.
However we do it, a private loan is and remains an interesting alternative to ordinary loans at all times. This does not mean that this form of credit does not entail any dangers, because what happens when the lender himself comes into financial difficulties? Without written agreement, he can claim the amount provided, but legally he has no leg to stand on. On the other hand with a written agreement, the lender is certain that he will see his money on a certain day, but he can not request it earlier. Finally, do not make any illusions, research has shown that in the past more than 70 percent of the private loans were provided at a fixed rate. Of the remaining 30 percent, more than half of these costs were charged on a one-off administrative basis, making the number of private loans without interest actually almost negligible.