All forms of borrowing money are becoming cheaper, including a consumer credit. Read how loan rates develop in 2016 and how you can benefit from this.
Due to the economic crisis, the Euricash Bank (EB) has lowered policy rates in recent years. As a result, banks can get money to lend cheaply. The central bank wants to make lending attractive and boost spending within the Eurozone.
Borrow money cheaply
Due to the interest rate policy of the central bank, borrowing money has become increasingly cheaper. In the media, much attention is paid to the historically low mortgage interest rate (see our mortgage interest rate expectation 2016). The interest rate for consumer credit has also fallen in recent years.
Research by MoneyView shows that the interest for a revolving credit and a personal loan has fallen since 2011. From the peak (just above) 11%, the average credit interest is below 7%. This is an average rate. The lowest loan interest rate is currently 4.2%.
The same applies (unfortunately) to the savings interest expectation.
Competition credit companies
There is less competition between credit companies than with mortgage providers. As a result, the interest rate for consumer credit is falling less rapidly. Nevertheless, we see movement in the credit market. After the last EB interest rate cut, most credit companies have adjusted their rates downwards.
In addition to a lower lending rate, the credit companies are competing with broader conditions. For example, in recent years the age at which you can take out credit has been raised and you can take longer to repay a loan.
Benefit from the low borrowing rate
The low loan interest rate makes a consumer loan attractive for those who are temporarily short of money for a purchase. You can apply for a personal loan quickly and you do not pay any closing costs. A revolving credit is ideal if you want extra spending space. You can then borrow and pay when it suits you
Those who now take out a consumer credit will of course receive the current low interest rate. There are more ways to take advantage of the low loan rate:
- Transfer old loan (s): you often pay too much for a consumer credit that has been running for a while. You can transfer this to the current low credit rate.
- Financing a renovation advantageously: the low loan interest rate offers the possibility of financing a renovation advantageously, including interest deduction.
- Transfer expensive loans: an outstanding balance with a credit card company or mail order company are examples of expensive loans. The so-called ‘flash loans’ with a short duration are also known for their high interest rates.
- Prevent red standing: red standing is an expensive form of borrowing. Try to prevent this.
Credit interest forecast
We expect the borrowing rate to remain at the current low level in 2016. Inflation in the Eurozone is still far from the desired level of almost 2%. That is why the EB has extended the crisis measures to 2017. Consumers can therefore benefit from the low lending rate for a while. Also read our forecast for credit interest in 2017.