Monthly Archives: November 2018

Will student loan become more expensive?

Studying is likely to become more expensive in the coming years.

Student in Class 3618969705 300x196

For example, we read in the coalition agreement that the parties have decided to align the student loan with the 10-year interest rate.

That is not a good message for those who borrow money for their studies . They will pay extra interest for this in the future. Below you can read more about this coalition agreement.

Studying more expensive? That’s how it is:

Studying is expensive. But the government also incurs costs for providing student loans. After all, they borrow money for that. They get the money from government bonds. And just as you have to pay interest on the student loan, the government also has to pay interest on the amount they borrow. And they pass on this interest to all students. With long-term loans (so the longer the interest rate is fixed) the interest rate is higher.

5 and 10-year interest

The Dutch government now uses the 5-year interest rate. This interest is therefore fixed for 5 years at a negative interest rate of -0.23%. Students who borrow money from the government and want to do 10 years to redeem it, who borrow at an interest rate of (at this time) 0.58%. Because after all, the longer the interest rate is fixed, the higher the interest rate. In practice, it means that a student loan with a term of 10 years, costs about 85 euros extra per year.

The new loan standard does not apply to the students of today

There is also good news for students. Because the new interest rate for loans of 10 years, which only applies to people who will study in the future. If you are currently studying, you do not have to worry.

Ps: Before the new interest rate applies to new students, there is still a need to change the law. Definitively it is therefore not in the least … Read also how it is with student loan and buying a house .

Employer loans: Useful for employees?

An employer loan can be an alternative to traditional loan, but not only brings benefits but also some legal pitfalls. 

 

Instead of going to the bank, the path to financing can also lead to the boss or the personnel office. Whether an employer loan is better or worse than a financing at a bank, can not say flat-rate. What is certain, however, is that if you borrow from the boss, you have to pay much more attention to avoid getting into legal trouble.

What is an employer loan?

The employer loan is basically a normal loan according to § 488 ff. Civil Code (BGB). The fact that the lender is also your employer is legally irrelevant in most cases. If interest rates are not lower than those currently prevalent on the financial market, the employer’s loan is even classified as consumer loan under §§ 491 ff. BGB. Special rules apply in part to companies that are themselves part of the financial industry.

Employer loans are usually earmarked. By the way, your employer may not grant you a loan if you want to buy company-owned products – this is prohibited by § 107 of the Gewerbeordnung (GewO). The only exception: If you want to buy company shares before a pending IPO.

Tax specifics of the employer loan

If the conditions on which your employer lends you money are better than usual in the market, this is considered a pecuniary advantage. This must be taxed accordingly. So it may well be that the employer loan in the end, despite low interest rates is not cheaper than a bank loan with good terms .

The current exemption levels for benefits in kind by the employer are relatively complicated, so that legal advice from a tax expert is recommended. However, there are also costs that you should keep in mind when weighing bank and employer loan. An alternative to employee loans can be an interest subsidy: you take out a loan from a bank and your boss pays the interest. However, this is also a pecuniary advantage.

Loan from the boss: what belongs in the contract?

With an employer loan, you are to a certain extent tied to your company – that makes such financing attractive for companies. Think well, if you want that. Sometimes the boss should not even know that you need a cash injection. If you opt for the company loan, the following is in the contract:

  • loan amount
  • running time
  • effective interest
  • repayment agreements
  • collateral
  • Termination of the loan
  • Regulations, what happens when the employment is terminated

If you cancel or give notice yourself, the repayment of the remaining debt can be demanded within three months – unless you have agreed otherwise. Loans with a value of less than 200 euros can even be due immediately.

Does every employee get a loan?

There is no legal claim that your boss must grant you an employer loan. Even a wage advance, in which you do not get more money, but the payment is only a little earlier, is purely voluntary.

However, if your company grants loans to employees, the principle of equal treatment applies: the conditions must be the same for all employees. For example, part-time workers must not be placed in a worse position than people with a full-time job. However, the principle of equal treatment does not mean that all employees get a loan. For example, if there is already a wage seizure, the company may legitimately decline your request for an employer loan.

Incidentally, should you have difficulty repaying, your employer can not just withhold the wages. Because even for him the seizure exemptions under § 850 Civil Procedure Code (ZPO) apply.