What are action rates and are they interesting for you?
Lenders regularly stunt great offers to convince you to take out a loan with them. These offers make it very attractive to take out a loan. Action rates are often used; interest rates that only apply for a short period of time and which are increased over time. And that entails extra costs.
The interest rates seem interesting at first sight. After all, you don’t have to pay as much as you expected in the beginning. But once the promotional period is over, your monthly repayment suddenly becomes a lot higher. And that can lead to you having less money left each month and thus incurring a major financial disadvantage. So interest rates are not always interesting, but what about your situation?
The idea behind action rates
The moment a nice car is discounted, the sales figures increase. The price is lower, so people are persuaded to buy the vehicle anyway. After all, you save money and a great advantage is achieved with it. The moment you drive a year, you suddenly have to pay extra for the vehicle, and these costs continue every month. This is the same idea behind action rates.
Lowering interest rates makes the loan a lot more interesting. This means that a large number of people take out the loan. But over time, the cost of the loan increases. A higher interest rate is applied or the redemption and administration costs go up. From that moment on, you no longer pay the action interest, and you simply have to pay a high amount for the loan repayment.
The most annoying thing for consumers is that the interest that follows the promotional interest is a lot higher. This is drawn up by the lenders as compensation for the loss of the promotional interest. In other words: after the promotional period is over your monthly costs will increase considerably. Seen over the total term, you therefore pay considerably more than with a lender that does not use an interest rate.
How dangerous are action rates?
Ultimately, it also comes with action interest that you have to be careful before you take out the loan. It sounds very attractive to pay 2.5% less interest in the first year, but you have to know that the interest rate will eventually be compensated and will turn out higher after a year or two. And here you can get into serious trouble the moment your income does not increase. You keep the same thing every month and you have to pay more at the same time. For many people, these are the moments when the savings must be used, as a result of which planned purchases, such as a holiday, fall away.
If your biggest reason for choosing a specific credit lies in the fact that there is a nice discount on the interest, it is good to consider whether it is indeed a good idea to opt for this credit.
Loans without interest rates
Have you seen a good loan where an interest rate is used? Then it can be interesting to present this loan to your current bank or lender. They can possibly present an alternative to this loan, so that you can still obtain the desired credit. Because your current bank, too, is looking for new opportunities to provide credit, there is a chance that they will provide the loan and that there are no dangerous interest rates. So you always know in advance what you pay and you do not run the risk that interest rates suddenly rise.
Watch out for lenders with offers
Nowadays you often hear about providers who come up with annoying conditions that make people feel cheated afterwards. The interest rates are increased after an action, skyrocketing costs are charged for the administration and the total costs of the credit increase every month. You absolutely must prevent this, because it will only result in your current income and savings capital being affected.
Therefore, stay away from lenders who are trying to get you in by coming up with all kinds of offers and using promotional interest rates. Only then can you prevent you from getting involved with a bad party, and can you ensure that you still get the loan you need from your current bank.