It is a hot topic just after the holidays and expensive December: buying on credit via credit cards, at webshops or shipping house credits, can lead to financial problems. Not in the least because web stores often charge usury rates and aim for the financially weak already.
Minister of Finance Hoekstra is tired of it and keeps a sharp eye on home shopping companies. Hoekstra mentions the number of people with payment arrears and the number of consumers buying on the Puff as unacceptably high.
He, therefore, gives online stores one year to put their affairs in order and to reduce the number of purchases on installments.
Consumers who get into debt through paying in installments must be protected. Especially since it often concerns people who already have financial problems. Thanks to all these credits, they are even more affected by the rain.
Unclear debts due to usury rates
At large online shops such as Wehkamp, Otto and the Mediamarkt, customers can opt for the ‘spread payment’ payment option. That seems like a great deal: the product is delivered directly to your home and payment is made in monthly installments. But what seems so beautiful is often a financial block. Such a payment can take years, which of course costs extra money. Certainly, since the interest rates often amount to 14%, the legal maximum allowable percentage.
This is quite lucrative for online stores. This is evident, for example, from the 2019 annual report from Wehkamp: the loans and insurance alone provide the webshop with around 8% of annual revenue.
But what does it cost the customer? A calculation: if you buy a new washing machine or TV at the Mediamarkt via the ‘spread payment’ option, you pay 13.5% interest, as can be read on the website. With a price of 1000 dollars and payment in 4.5 years, the total amount becomes 1319 dollars, one third more expensive than the original price! Who has (more than one) of this type of credit is therefore not only much more expensive but can also lose the overview in the jungle of monthly payments and debts that seem to have no end.
Purchase by installment: chicken with golden eggs for webshops
Extra cru in this context is that for some people buying on installment is the only way to make another purchase. For example, for people who are already in debt due to other loans, and then the washing machine also gives up. That the price of a new washing machine via spread payments rises to more than 30% more, they are forced to buy.
The government wants webshops to no longer offer these expensive payment options (installment payments/installment payments/payment in installments). But for the stores themselves, the chicken with golden eggs, which they do not want to slaughter, will continue to pay in installments.
The best tip that we can give consumers is: never to buy products on installment. In the end, you pay a lot more and are stuck for years on a debt. Anyone who has more than one loan of this type often loses the overview, with all its consequences.
Responsible: transfer loans to personal loan
What is then a wise way to make a (necessary) expensive expense or to create an overview within your existing loans and credits?
The best option is to take over existing, expensive loans. Many people don’t think about this or know the option of refinancing loans at all. But it is often the cheapest and most relaxing way to create an overview of all your debts in one go.
How does resizing work? You determine the total amount of your existing loans (webshops, overdraft, credit card debts, mail order credits, etc.). You then take out a Personal Loan for this amount and pay off all outstanding debts in one go.
Merging and transferring loans to one Personal Loan has the following advantages:
- The interest rate of a Personal Loan is always lower than that of your other debts. Currently, interest rates are even historically low: from 3.9%.
- You borrow the total amount in one go, so you get rid of all other expenses, unclear loans in one fell swoop.
- The interest remains fixed during the term of your Personal Loan. So you always know exactly where you stand and you will not be faced with unpleasant surprises.
- Overview and tranquility: pay off a fixed amount per month for just one loan.
- Paying off in between is always allowed and there is no penalty. We always recommend that you pay off at an accelerated pace because the sooner you are debt-free, the better.
Do you want to know if it is also possible for you to transfer your current, expensive loans to one Personal Loan with a lower interest rate and a good overview?
Here you can request a quote without obligation and you will immediately receive clarity about the options.
The sooner you can go through debt-free life again, the better