Interest

1. Effective interest rate
   The annual effective interest rate is a good way of comparing different loan offers because it should include all the costs of the loan.
2. Maximum interest
   Lenders are not allowed to charge more than a set maximum interest rate, which is the statutory interest rate plus 12%. Forms of credit such as mail order credit and card credit are expensive because the interest rate is close to the maximum permitted level.
3. No penalties for early repayments
   A variable interest rate is charged on many (continuous) loans. In the case of loans with a variable interest rate you can repay the loan early without incurring any penalties, which you might consider doing if the interest on your loan is increased or is due to increase further, for example.

Is the interest tax-deductible?
Subject to certain conditions, the interest on mortgage credit is tax-deductible if the mortgage is for a principle owner-occupied house. In other words, the interest is not deductible if you use the mortgage (or part of it) to purchase other items such as a caravan, a car, a boat or a holiday home. The interest on consumer credit is not deductible.

Check the tax aspects carefully beforehand, but never buy a financial product for tax reasons. For more information, go to the Internet site of the Netherlands Tax and Customs Administration (Belastingdienst).

Default interest
If you do not keep to the payment schedule that you agreed with the lender, the lender is allowed to charge you default interest. The default interest must not be higher than the interest rate to be paid under the credit agreement. Therefore, if you take out a loan with an interest rate of ten percent, the default interest must not be more than ten percent.