The rate hike by the European Central Bank announced for July is not good news for those planning to finance a particular project soon. The increase will cause a rise in the cost of personal loans that are usually requested for that purpose: to buy a car, to reform the house, to acquire furniture... For this reason, people who are thinking of applying for a loan should not postpone their decision much longer and , in this way, anticipate that banks raise their interest rates.
However, given the current context (runaway inflation, economic instability...), it is not advisable to borrow "crazily" either. According to the financial comparator HelpMyCash.com, it is only advisable to request financing if you have sufficient income to pay the loan installments and, at the same time, face any unforeseen event that may arise. And there's only one way to check if you're earning an adequate salary: get out the calculator and do the numbers.
From HelpMyCash they affirm that a debtor should not spend more than 35% of what they earn each month (in net salary) in paying the installments of the credits they have contracted: the car loan, the mortgage, a credit card... According to the analysts of this comparator, it is a percentage that allows to cover the rest of the expenses that a person usually has and that, in addition, gives a certain margin to face the economic contingencies that may arise during the term of repayment of the debts .
Let's say, for example, that a person earns 1,700 euros net per month and pays 200 euros per month to return a purchase paid in installments with a credit card. In that case, the maximum amount you can dedicate to paying your debts is 595 euros per month (35% of 1,700). And since you already pay a monthly payment of 200 euros for your credit card, the installments of the loan you contract cannot exceed 395 euros per month.
It is also important that the applicant's employment situation is stable. In other words, having an indefinite contract if you are salaried or having a business that has been around for a certain amount of time (about two years) if you are self-employed. Thus, the chances of having problems paying the loan will be much lower.
And how can you pay a fee that meets that 35% rule? To begin with, you should not ask for more money than necessary, because the higher the loan amount, the more expensive your monthly payments will be (you will have to repay more money each month). The ideal is to adjust the project budget as much as possible and, if possible, use part of the savings to cover a portion of the price and thus reduce the principal of the loan.
Secondly, you can play with the return period to adjust the amount of the installments. The longer it takes to repay the loan, the lower the monthly payments will be. However, you will also have to pay more in interest, because it will be generated over a longer period of time. According to HelpMyCash, the most advisable thing is to choose a term that is not longer than the account and that, at the same time, allows you to pay affordable monthly payments.
Finally, you have to contract a loan with an interest that is as low as possible. On average, according to the Bank of Spain, the average interest on loans for personal projects is between 6.50% and 7%. The ideal, therefore, is to request financing from an entity that offers rates below that average. Thus, in addition to paying an affordable fee, the price of the loan will be lower.
Put to pay little for the loan, it is also advisable to avoid any additional expenses that the financier may charge the client: formalization commissions, life insurance or payment protection... Although several entities do include them in the small print of their credits ( lifelong banks, especially), there are others that never apply them. For example, the Cofidis Personal Loan (4.95% TIN; 5.06% APR) or the Bank Norwegian Personal Loan (5.99% TIN; 6.13% APR) do not have opening or study fees or insurance or other associated products.
To find that credit with low interest and without additional expenses, you have to go to several entities, compare their offers and do numbers to see which one comes out more on account. But if the applicant has little time, they can access the HelpMyCash page, where they will find the list of the best personal loans that are granted in Spain, ordered from lowest to highest price.
