Personal loans, yes. No microcredit.
Unlike mortgages, in which the repayment period can reach 40 years, personal loans are characterized by a period of much shorter-return between one month and five-years, a loan not very high -- between 3,000 euros and 60,000 euros and an interest rate is quite high, between 7 and 10% APR (and even more in loans under € 3,000).
This higher rate of interest is also because the bank runs a higher risk because it does not have any kind of guarantee in the event of a default, whereas in the mortgage guarantee is a property, which empowers the bank to dispose of the thing mortgaged in the event of default.
Need € 3,000?: Careful!
Recently there have been financial companies, which are advertised heavily in television, which are specialized in the segment of micro-loans for an amount not exceeding 3,000 euros. With a high cost of financing, its nominal interest is around 20% annually, and may even reach a 22'9% and the APR is up to 24'6%.
The granting of a convenient and faster consumer credit conditions fired can hide under the small print, and what is presented as a great opportunity to deal with a sudden, it becomes a cost greater than we expected. Thus, for a credit of 3,000 euros, with an APR of 24'6%, after 12 months will have paid 415 euros in interest.
Written by Carlos Lopez on May 12, 2006 with 1 comment
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