The credit system in the Netherlands can be defined in large terms as the relationship between a person (natural or legal) that provide a loan and the person who takes the loan. By extension, the credit system in the Netherlands is based on credits offered by both banking and non-banking institutions to natural or legal persons.
The parties involved in a credit in the Netherlands
The person making the loan is called lender and the person who benefits from the loan is the debtor. The loan is usually an amount of money that must be repaid within a specified time period, together with the interest. Interest is the gain (benefit) claimed by the creditor from the debtor who uses the loan. The creditor has a right to claim against the debtor, having the right to demand the return of the loan and interest under the agreement between the two parties. The debtor is obliged to return the loan plus interest to the creditor within the time specified by the contract.
Types of loans in the Netherlands
A personal loan (also called PL) is a form of credit included in the credit system in the Netherlands where the loan amount, term and interest rate are established in the contract signed between the debtor and the bank institution. This means that a personal loan has a fixed monthly payment consisting of interest and principal.
A revolving credit in the Netherlands imply a credit limit, defined as the maximum amount that can be borrowed. The debtor must pay a monthly principal and interest. The principal and interest are usually fixed as a percentage of the credit limit.
Each real estate owner in the Netherlands can benefit from a property tax credit, on the basis of an appreciation of the good. The goods are given a WOZ value that establishes the amount of money that can be loan by this type of credit. The interest rate on a property tax credit is often very sharp.
A business loan or business financing can be concluded between legal persons and bank institutions in the Netherlands. The most common bank institutions that offer this type of loan are ABN AMRO, Postbank, ING and Rabobank.
The supplier credit is the most common form of business financing. The supplier shall provide credit in the form of a payment, ranging from months to years. The advantage of supplier credit is that the liquidity of the company is not compromised.
A subordinated loan is a loan where the creditor is subordinated in the event of bankruptcy of the debtor. The creditor takes the last place in the order of creditors in a bankruptcy. Subordination of a loan must be contractually agreed.
The credit contract
An important institution in the credit system in the Netherlands is the The Credit Registration Office (BKR), that stores the essential information about all the credits, creditors and debtors in the Netherlands, by using the registration in the Central Credit Information System (CKI).
The BKR also receives all the information provided by a credit contract: the amount of the credit, the time of credit arose, the planned final repayment month, the actual final payment month, the type of credit, any details on the repayment of the credit, personal information about the debtor (name, date of birth, address, residence, personal ID information) and also about the credit institution.
For further details about the credit system in the Netherlands, the types of loans and the eligibility procedure, please contact our Dutch accountants.