Do you have a dream vacation that is just around the corner and you need some extra money? Do you want to redecorate the bedroom, but the money is not enough? Has the washing machine suddenly broken and you need a new one?
In all such cases and many more, taking out a consumer loan can be a good solution. If you have not taken such a loan before, or are not quite sure how it works, we give you a little introduction to it here.
Loans without collateral
Dear children have many names are said, and the same can be said for the different names used on consumer loans. Loans without collateral, day loans or credit loans are all used interchangeably, but are largely a term for the same. It is a granted loan from a bank that you do not need to provide any security for, and is a loan where the money can be used for exactly what you want.
Since the money is spent without any guarantee or mortgage, it is basically a riskier loan for a provider to issue. Therefore, the interest rate will usually be higher than what you can get on car loans or mortgages.
Effective vs. nominal
If you have decided to take out a consumer loan you will quickly see that there are many providers to choose from. So using a site like norskkreditt.no that has collected the offers for you and organized it in a clear way can be wise, and not least time-saving.
When comparing the various loans there are a few important things to be aware of, especially the difference between an effective and nominal interest rate.
Everyone is obviously looking for the cheapest loan with the lowest interest rate. But it can often be confusing to see the offers when listed with either effective or nominal interest rates. A nominal interest rate will be lower than an effective rate. This is because all administrative costs, setup fees, installments and other fees that may have to be included are not included.
Thus, it is only the basic interest rate. It gives you a good indication of what to expect, but to see what you actually have to pay when the repayment starts is the effective one you have to check. An effective interest rate has all the costs with the loan included and is why it will always be slightly higher .
Different interest rates
One can quickly be surprised when an offer comes back from a bank, and find that the interest rate offered is higher than the guide listed online.
The explanation for this is that a bank will always set the loan rate individually based on the applicant’s financial situation. An interest rate reflects to a certain extent the risk the bank takes with you, so for an applicant with a tight economy, there is a higher likelihood that the money will not be repaid than for someone with a good economy.
Therefore, a wise tip for improving the terms of an offer is to bring a co-applicant. There is another person who will be jointly and severally liable for the loan if the principal does not pay the repayment. And since the bank then has two people they can get the payment back from, they will usually be more liberal with the interest rate.