The annuity loan is a consumer loan and is almost exactly the same as the personal loan, but the loan is repaid in a different way. Just as with a personal loan, the monthly costs of an annuitary loan remain the same. The duration will also not change in the meantime. What has changed is the ratio between the interest charge and the repayment.
The outstanding debt decreases after each payment. As a result, the interest payment also gets lower and lower, because the residual debt decreases. The result is that you pay more and less and pay less interest. As a result, you will hardly notice the changes that take place in the monthly payments.
Paying an annual loan
When you take out the annuity, you will have to pay the annuity. An annuity is an amount to be paid or received periodically within an agreed term. This term is used not only for the annuitary loan, but also for the annuity mortgage. The mortgage is also repaid by means of fixed, periodic amounts. In both cases the annuity consists of interest and repayment. The interest charges decrease slowly, which increases the repayment of the residual debt.
Personal loan or annuity loan?
Although there is no valid reason for its operation, preference is often given to the personal loan. However, the annuity loan offers the same form of security. This loan form can therefore also be used to replace a washing machine or to finance a new car, motorcycle, caravan or boat. Both loans are good in case you want to borrow for a one-time purchase.
Take out an annuity loan benefits
- Even with an annuitary loan, no surprises await you. The monthly costs of the credit remain the same during the fixed term. You know in advance exactly what awaits you;
- A lender does not run an interest rate risk and therefore usually offers a lower interest rate when providing annuitary loans.
We recommend that you have your annuity calculated by a consultant. An annuity calculation is a simple operation for a good adviser. In addition to annuity, it is important that your entire personal (financial) situation is taken into account in the calculation. This will show whether an annuity is suitable for your situation.