Are you planning a home renovation? Have you saved up enough money to go on vacation? Sometimes, individuals cope with a lack of finances and cannot afford to pay for the products or services they want.
When facing financial hardship, consumer loans can be used to afford the renovation you postponed for so long or the vacation you dreamed of enjoying. In Norway, there are various billig unsecure consumer loans.
Here is everything you need to know about them
What is a consumer loan?
It’s a loan provided to clients for the purpose of financing a product or using a service. The client then pays the sum off with interest within the agreed term. The money can be used for different reasons, such as home renovation, unforeseen expenses, consumables, refinancing of credit card debt, travel and vacation, medical bills, new appliances, etc.
Individuals should make a difference between a small loan and a microloan. The former is provided up to NOK 75,000 by some banks, but the maximum limit is usually lower. The maximum amount of the latter is NOK 10,000, while the repayment period is usually no longer than thirty days. The primary purpose of microloans is to provide clients with an opportunity to pay unforeseen costs or other goods of limited duration.
What are the requirements of banks?
Prior to applying for a consumer loan, individuals should get familiar with the requirements of banks. Lenders perform a credit assessment on applicants, which includes their current debt, income, and credit history. Applicants should be Norwegian citizens over eighteen years old. Also, they should have a fixed income and pay taxes for at least three years.
The chances of being approved for an unsecured loan usually increase if applicants apply with a co-borrower, such as a spouse, cohabitant, friend, or relative. In such cases, the overall credit score is better, providing the bank with more security. Nevertheless, the applicant and co-applicant are both held legally responsible for repaying the borrowed sum.
The agreement on consumer loans can be altered along the way only in two cases. Borrowers should either want to repay the borrowed amount faster than agreed or have trouble keeping up with the repayment schedule. In the second scenario, it’s essential for borrowers to contact the bank immediately after the payment problems arise and ask the bank to make temporary changes to the schedule. Some moneylenders even provide one or two months free of payment to assist clients with payment issues.
In case your application was rejected, you should first identify the reasons for the rejection and do your best to earn the approval of banks. Most applications are rejected either because of high debt or low income. You should check whether there are some payment remarks registered in your name and cover them as soon as possible.
Another method to try is adjusting the principal, as it might be too high. It’s important for all income to be declared, including rental properties and car rentals. As mentioned previously, a feasible alternative would be submitting an application together with a co-borrower.
In terms of the processing time, most consumer loans are usually processed on the day of the application. If you meet the eligibility criteria of lenders, you will receive an answer shortly. In general, the entire procedure is arranged electronically, along with signing the agreement through BankID.
How much can you borrow?
The largest part of lenders offers loans from at least NOK 5,000 to NOK 500,000, depending on the debt-to-income ratio of applicants. The standard repayment term is up to five years. Nevertheless, in the case of refinancing, the repayment period can be prolonged to fifteen years.
Moreover, your debt-to-income ratio will influence the interest rates offered by banks. Borrowers should make a difference between nominal and effective interest rates. The former refers to the basic interest rate, whereas the latter includes invoice fees, set-up fees, and forward costs.
Consumer loans vs. credit cards
Another difference that borrowers should make is between credit cards and consumer credits. For instance, credit cards provide a period of free interest, usually fifty days prior to the accrual of interest on your credit. Interest rates are relatively high, between fifteen and thirty percent. These cards are ideal when facing unforeseen expenses. In contrast, consumer loans have lower interest rates, but these start to run immediately.
There are numerous benefits of using this form of financing. For example, consumer credits have lower effective interest rates than credit cards and microloans. The rates of credit cards can reach up to thirty percent, while those of microloans up to twenty percent. This type of financing requires no security, such as equity or collateral. Fixed income is the only thing you need to be granted.
Furthermore, you can use this sum to refinance expensive debt and get better terms. The repayment period is flexible, up to five years. When refinancing, this period can be prolonged to fifteen years.
The bottom line
This form of financing can help you finance the expenditures you want.
Go for it!