Total costs approximate
The result of this calculation is an approximation. It is possible that the amount deviates slightly from the total cost price that a lender calculates. This is due to rounding differences when calculating.
Actual cost of revolving credit
With a revolving credit (DK), it is likely that the actual costs will ultimately differ from the calculation. After all, a revolving credit is a very flexible loan where everything can change during the term. You can make additional repayments and withdraw redeemed amounts again. In addition, the revolving credit has a variable interest rate – it can therefore change during the term.
Amount borrowed plus interest paid
The total cost of a loan is an addition of the total amount borrowed and the total interest paid. Both elements cannot be predicted with revolving credit. The result of our calculation is based on a credit in which you withdraw the limit amount at once, you do not make interim extra repayments, and you do not make any withdrawals, and the interest remains the same throughout the term. It is therefore highly unlikely that the total costs calculated will also show the real costs of the revolving credit.
Total amount of costs of a personal loan
For a personal loan (PL) it is much better to predict what the total costs will be. This loan is designed to do nothing about it: the interest, the monthly amount and the term are in principle fixed. So if you do not make additional interim payments and you serve the agreed duration in full, the calculation of the total costs for a personal loan is (approximate) correct.
Original loan amount plus interest
For the personal loan, too, the total amount of costs is an addition of the loan amount plus the interest. To find out what you pay extra for the expenditure that you will do with the money, you can simply deduct the loan amount from the total costs. The rest is interest. In fact, your purchase becomes considerably more expensive by making it with borrowed money.
Interest and costs
The term ‘total costs’ may give the impression that costs are also involved when taking out a loan. This is possible but is not common in the Netherlands. Intermediaries and advisors may not charge for their mediation, but lenders may charge for closing. Usually banks do not do this and the total costs of a loan therefore only consist of interest and repayment. The difference in the total amount of costs for an equal amount borrowed is therefore purely caused by a difference in interest.
Conditions can determine choice
However, do not forget to look at the conditions when comparing loans. Of course, the interest is very important: it determines the costs. A difference in conditions can ensure that a loan with a higher interest is still more sensible to take out – for example because you can then (with a personal loan) repay extra without penalty, or because the outstanding debt is canceled on death.