Loan repayment, what does it mean?

 

In Finland, consumption has already increased by four per cent during the year, while income has only increased by about one per cent. In addition, as many as 20,000 households are about to take out repayment free mortgages. What is repayment free, and should we be concerned about this development?

What is repayment free?

What is repayment free?

Repayment free means a temporary exemption from the repayment of a loan. During this period, only interest and handling costs are paid on the loan. At the same time, the loan period will be extended and the total cost of the loan will increase, as the loan capital will not be reduced during the free time.

Repayment grids are typically between 1 and 12 months and may be paid or unpaid, depending on the type of loan and bank. In most cases, you can apply for a grace period in Goodbank, unless otherwise agreed in advance.

Consumer loan repayment free

Consumer loan repayment free

In consumer loans, the repayment period is usually one month, and in most cases it is not granted for consecutive months. As an exception to this, for example, you can decide for yourself at Komplett Bank’s Flexible Loan Repayment Rate, as only interest and other fees are payable monthly. In addition, there is no limit to the number of free loan months for a loan. However, before opting for Good Lender or keeping the repayment free, make sure that the total cost of the credit does not become too high for yourself.

The table above shows that a consumer loan with a relatively low interest rate became almost a thousand euros more expensive on a repayment holiday. It is good to note that with higher interest rates, the difference in the total cost of the loans would be even higher. For this reason, you should always consider carefully taking a repayment-free period.

Most of the benefits and drawbacks of rest leave come from the realization that it brings flexibility to the economy, both good and bad. Below we distinguish the pros and cons of installment free.

Good sides

Good sides

+ Prepare for unexpected expenses and change in your ability to pay
Firstly, the flexibility of installing-free leave allows you to anticipate sudden changes in your ability to pay and your financial situation, such as unemployment, long-term illness or having a child.

+ Repayment of a higher interest rate loan
If you have taken out a high interest rate loan, then during the grace period you can concentrate on repaying the most expensive loan. Reducing higher interest rates can save you money on interest costs over the long term, with mortgage rates still relatively low in the current economic climate.

+ Increase your wealth with savings
The grace period can be used to increase your own savings. However, it is worth bearing in mind that savings may not be accrued very much during this period, as repayment free will also increase the cost of the loan.

If your savings are close to the heart, you can try comparing different savings accounts in our comprehensive savings account comparison:

Compare Savings Accounts!

+ Book for relaxation
When the loan does not have to be repaid for a while, the idea may be to relax a bit. Sometimes, it might be a good idea to get a little teary and go on a holiday trip to a remote country where you can forget the stresses of work. Fully relaxed when you return home, you can then step into the workforce and pay off your loan.

Cons

Cons

– Increasing borrowing costs and loan time
The main disadvantage of repayment gratuities is that they lead to higher interest costs and account management fees as the loan matures. Namely, during the grace period, only interest and other costs are paid to the financial institution, so that the loan capital is not reduced and the total cost of the loan increases.

– Risk of ill-considered consumption and borrowing
Due to the excess cash flow brought by the grace period, the risk of imprudent consumption and borrowing may increase. With more money available, spending it on impulse buys can start to tempt you. However, you should not give in to the temptation, but rather plan carefully what you are going to buy before you go shopping. If there is a need for major additional purchases, it is always a good idea to always try to save the necessary amount of money to purchase the product before you take a grace period.

– Risk of future interest rate increases
Especially with longer-term loans, raising interest rates is more or less risky. It is true that the period of low interest rates has been going on the market for quite some time and the major changes are foreseen. Nevertheless, you should never rely on the market as the situation may change at any moment. For example, in the event of a sharp rise in inflation, central banks would also have to react sooner to raising interest rates.

– Not for everyone: favors those who have paid well
The last downside to install grabs is that they favor people with good credit, who already have good credit history and payment history. For other borrowers, the grant of vacancy will be assessed on a case-by-case basis.

Is It Possible to Apply for Redemption Free?

Is It Possible to Apply for Redemption Free?

Now that interest rates are low, long-term loans are especially worth reducing. No one can know for sure when interest rates are going to rise again, so its a good idea to pay off your loan cheap now while you can.

If, on the other hand, you suddenly find yourself unemployed, and know that finding your next job may be the result of hard work, you may want to consider some time off. However, over the longer term, this is not profitable due to rising loan costs. Instead of a grace period, it may be wiser to ask the bank to change the loan repayment plan and, for example, reduce the monthly installment.

When you simply want to quit your daily life and get tired of work, you can leave your loan short for a short time so you can travel somewhere warmer to relax. Remember, however, that increased interest costs are waiting for the homeowner.

In order to avoid having to use the repayment gratuities, it is advisable to choose the loan right from the beginning. By comparing different loans you can find yourself the cheapest option. In our unbiased loan comparison, you can comprehensively compare different consumer loans:

 

Quick payday loan – Apply for an amount that suits you

One of the clearest and most highlighted benefits lies in the name.

Advantage # 1: Quick payday loans

Quick loans

It is quite quick and the vast majority of providers emphasize that you can receive the money within 48 hours. However, it’s not just the time that goes by until you have the money in your account that is fast.

The loan is often approved within a single or a few hours. This takes advantage of many people who are missing out on money right now, enabling them to quickly regain their bank account.
However, this is not the case anymore. Namely, restrictions have been imposed on how fast one-time loans can be. The rules have introduced a compulsory period of thinking of 48 hours, which means that the loan can only be approved after these two days. This should lead to fewer people regretting what some unlucky people do – we will come back to this later.

Benefit # 2: Financial freedom through quick payday loans

Benefit # 2: Financial freedom through quick loans

If you ask people if they dream of becoming rich, many will say yes. However, many will add that they do not have to win 100 million in the lottery, but that they will simply be financially independent and experience financial freedom.
This actually contributes to online loans. One of the key benefits of this type of loan is that you do not have to explain the loan and that you can borrow from the computer, the mobile is the tablet. This avoids phone calls and meetings with the bank advisor, giving the vast majority a sense of financial freedom. In addition, discretion is also really nice, and many providers do not ask questions that some may find intrusive or regulatory. However, you always have to have a repayment plan, so the loan is of course not a permanent solution.

Benefit # 3: Patch the budget with a quick payday loan

Benefit # 3: Patch the budget with a quick loan

The third advantage is somewhat related to speed. It’s about quickly putting a patch on its finances.
The trend in the lending habits of the Danes when talking about fast loans online shows that approximately 2/3 of the loans that have been taken up in Denmark over the years are under DKK 3000. This is incredibly well linked to the fact that loans are often taken up to cover unforeseen bills or small budget gaps, which sometimes appear as unpleasant surprises.
This is again related to speed. Because if you want to borrow a small amount, such as 1,500 or 2,500, to cover an extra water bill, for example, then it seems difficult to call your bank and wait a long time to get the loan paid off.

Compare All Loans and Apply | 500 – 60,000 €

Consumer credit generally refers to a loan that is to be used for some form of consumption. Credit is often low in value and short in loan maturity, so it usually takes up to a few years to repay.

There are many different types of consumer loans, such as home improvement loans, vacation loans or car loans. There are many different types of credit available on the loan market, each of which you can choose to apply for.

What is Consumer Credit?

What is Consumer Credit?

To put it bluntly, a loan is defined as a consumer credit if the loan is worth between $ 1,000 and $ 50,000 and is intended to buy a service such as travel or repair, or a product such as a boat or electronics. In addition to credit provided by financing companies and banks, consumer credit also includes installment purchase agreements offered by shops. It is always advisable for the consumer to consider the purpose and need of the credit and his ability to repay before applying. Always compare loans before applying.

Consumer loans in Finland were on the rise in early 2019. Just two years ago, the consumer loan portfolio was € 14.4 billion and the average growth rate was 3.7%, but this figure has already been exceeded in 2019. The growth of the loan portfolio is focused on longer term loans over five years.

Longer loan periods usually mean a higher loan amount, somehow the growth of the consumer loan portfolio in 2016 will be focused on new consumer loans worth several thousand euros. Typically, this kind of credit in Finland is about EUR 15,000.

This page explains the following important things about consumer credit.

This page explains the following important things about consumer credit.

  1. What is Consumer Credit?
  2. Consumer Credit Online or Consumer Credit Bank?
  3. How do consumer loans differ?
  4. Unsecured consumer credit
  5. Applying for a consumer credit
  6. Interest rate on consumer credit
  7. How to Choose the Best Consumer Credit?
  8. Consumer loan repayment and charges
  9. Reasons for rejecting your consumer credit application

Consumer Credit Online or Consumer Credit Bank?

When applying for credit, you have more options for applying for a loan. You can think about whether online consumer credit is a good option for you, or whether traditional bank consumer credit would be better. However, competition between banks is fierce, so a comparison is always worthwhile.

Many traditional banks offer different types of credit products, but there are very few differences between them. It is important to keep in mind the following:

  • Interest rate on consumer credit
  • Other costs of the loan
  • Own financial situation and ability to repay
  • Apply for consumer credit only if you know you can repay the loan
  • Do you want to combine loans? In this case, select the consolidation loan

This site has a handy consumer credit comparison where you can compare and apply for unsecured consumer loans online. In addition, they often have a fast processing time. Compare to see how you can get your consumer credit right away and you will surely find the best option.

How do consumer loans differ?

Consumer loans can be collateralised or unsecured. In an unsecured consumer loan, the loan is obtained without collateral or collateral. Because banks have no pledge on unsecured consumer loans, interest rates on unsecured loans are often higher than interest rates on secured loans. Thus, in unsecured consumer loans, banks or finance companies have nothing to compensate for their own losses if the borrower is unable to repay their loan in full. Therefore, interest rates are slightly higher than in secured consumer loans.

A secured credit is a loan that the borrower has given to a bank or finance company to secure some of their own assets against the loan. For example, housing, a car, a motorcycle, a summer cottage or other eligible property owned by the borrower may be covered. In secured consumer loans, the interest rate on credit is often lower than in unsecured consumer loans.

This is because, in the case of secured loans, the risk of a bank or finance company losing the amount they borrow is reduced because, in the event of a possible insolvency, the borrower, bank or finance company has some sort of pledge of assets to offset any loss.

Interest rates on consumer loans

The fact that loans have different interest rates comes as no surprise to many. However, you may be surprised to find that the same loan provider may have different interest rates on the same loan.

This is because some service providers use so-called risk or customer profile pricing. In this case, the loan interest rate is somewhat dependent on what kind of customer is applying for the loan.

Our comparison shows that consumer interest rates may have a major counterpart between the minimum and maximum rates. So if you are considering taking out a loan, you might also want to consider your own credit rating.

How is the loan interest determined?

How is the loan interest determined?

Usually the loan is offered at a lower rate if the customer has a good customer profile. This may mean, for example, that the customer has a good income in relation to the amount of debt they are applying for, that they have conscientiously repaid their loan or that they have no entry in the credit register.

Each lender has different ways of scoring their customers. Generally, lenders do not disclose their exact scoring process, but you will not know your interest until you get an initial loan offer. This again requires applying for a loan. Elsewhere in the world, Facebook friends, for example, can influence whether you get a loan or not.

The most interesting examples of interest rate pricing in Finland are probably peer-to-peer loans. For example, in Fellow Finance, the interest rate on your loan is determined not only by your credit rating but also by the offers of the lenders.

Fluctuations in consumer credit interest rates

Fluctuations in consumer credit interest rates

We went through the interest rates on consumer loans offered in Finland. Some lenders used a fixed rate, ie the same rate for all customers, regardless of their customer profile. Such lenders were, for example, My Lender and Santander. It is noteworthy in Santander that they provide consumer credit up to EUR 50,000 and the lowest interest rate, the highest loan amount.

However, most lenders had variable interest rates. The table below allows you to compare the interest rates of different lenders.

* When the loan amount exceeds 40,000 euros.

The current annual interest rate and total cost are the most important

The current annual interest rate and total cost are the most important

Comparing interest rates and understanding that many lenders lend to different borrowers on different terms (at different rates) is important to the consumer. Still, it can be said that it is even more important to realize that the APR and the total cost are the most useful indicators.

They allow you to compare loans in a consistent and efficient way. Loans may have low interest rates, but many different payments, such as withdrawal fees or monthly and opening fees. These are all clear of the total cost and the annual percentage rate of charge.

How do I choose the best loan?

With us, we go to great lengths to help you make the best decisions. We do this, among other things, by giving you good advice on various topics, and here it is about loans.

Mortgages and other consumer loans have become insanely popular on the web, and this is far from anything bad as long as these loans are borrowed on an enlightened basis. Here you can read about how to choose the best online loan.

What needs do you have?

best loan

First of all, you should consider your needs and desires. Is there anything that is particularly important to you? Or are there some terms that you cannot compromise on?

One of the most important things to consider in this process is your option for repayment. If you need a long maturity with a low monthly benefit, then you should not compromise on that need.

However, it also applies the other way around. If you want to get rid of the debt as soon as possible, and if you have the funds to pay off a large amount each month, then you should undoubtedly choose a loan where it is possible to pay off a large percentage of the loan each time.

Another important need that the loan must meet is the size of the loan. If you would like to borrow 50,000 kroner, it goes without saying that the loan must offer this before it is attractive to you.

Compare loans online

loans online

Once you’ve figured out what needs you need to fill, you’re ready to look for loans online. But how do you do it most effectively?
You do this by comparing loans at a loan comparison site. Here at Tom Wilcher you can compare loans online and it is quite easy.

First, find the loans that match your needs in terms of loan size, maturity and installments. Once you find a few candidates that match those wishes, then it is just about finding the cheapest of these. This can be done in a very simple way – by looking at the annual cost of the loan as a percentage. This figure will be marked with the abbreviation ‘OPP’, and this indicator should appear on all loans.

The loan with the lowest APR will be the loan that will cost you the least money.

Alternatives to Online Loans

Alternatives to Online Loans

If you do not want to borrow money online or you cannot be approved to borrow money online, then it is necessary to look for alternatives.

Here are some alternatives that many people use:

  • Bank loans
  • Crowd Lending
  • Private loans from family or friends

All of the three above are good alternatives, but it’s hard to say what you should choose. All methods come with both advantages and disadvantages and therefore you should decide with yourself what appeals to you most.

At least you now have the opportunity to find the best and cheapest loans on the web, and you will quickly be able to receive your money.

Loan application What to consider?

This guide covers various things about how to apply for a loan. We deal with loan application questions like: how much can you get a loan, how does a credit decision evaluation work, and what if your bank doesn’t approve a loan?

Loan, How Much Can You Get?

Loan, How Much Can You Get?

The question of how much you can get a loan comes up in many ways when it comes to applying for a loan. Can you get enough loan to buy the car or vacation that you dream of?

When looking at a loan, you should focus on how much you need the loan – and what you plan to use it for. Instead, maximizing your loan amount is never a good goal.
Also read: The loan application process – how does it work?

The amount of the loan depends on the applicant

The amount of the loan depends on the applicant

How much you can get for a loan depends on many things. Applying for the largest loan is hardly worth the pleasure of applying for a large loan. Instead, you should think carefully about how much you need a loan.

Applying for a loan and the amount of the loan are affected by, among other things, the applicant’s income and payment history. The basic requirements for getting a loan are usually regular income (such as a job or retirement income) and pure credit history.

If the applicant has a default payment, the loan is usually not available. Only a very few lenders differ from this. However, one exception confirms the rule, but GoodBank also offers GoodBankPrivat loan to the creditless. However, they also have a tight screen: Applicants must have no new default payment entries in the last year. If the applicant has older credit malfunctions, they must have been completed, ie they must have a ref entry.

There are rules of thumb for how big loans a customer can get. For example, Good Finance often assumes that a consumer credit can be obtained three times its monthly income.

Instant Leverages and Loan Limits

Instant Leverages and Loan Limits

Following the tightening of the Quick Leverage Act, many companies have shifted to offering larger loans. The Quick Leverage Act and its interest rate cap only apply to loans of less than $ 2,000. The interest rate cap is based on the principle that the effective annual interest rate of the loan may not exceed 50%. However, the reference rate is not taken into account by the interest rate cap, for example, the annual interest rate with the reference rate may be 50.2%, for example.

In practice, however, many companies offer so-called “flex” or “limit” loans. They always get a loan limit of more than € 2,000, usually € 2,100, when applying for a loan. This is despite the fact that the customer would apply for a loan of, say, EUR 300. When the loan is more than EUR 2,000, it is not subject to the interest rate cap on instant loans. Thus, the annual percentage rate of charge may be significantly higher than 50% and the reference rate.

There is no obligation to increase the entire loan limit, but the customer can only increase the amount he / she intended, for example, EUR 300. However, the customer may be tempted to raise the whole of just over € 2,000, since it is still possible. However, in this case, keep your head cold and remember that you should not borrow more than is necessary.

Focus on total costs

Focus on total costs

Whatever the loan amount, in the end, always pay attention to the total cost of the loan. One good metric should not be confused, such as low monthly interest rates or low opening costs, but should focus on the whole. However, in the end, you will have to pay the full cost, so it is a good idea to get there first.

Total cost refers to all costs that come with a loan. Another measure used is the effective annual interest rate. The annual percentage rate of charge is expressed as a percentage and includes:

  • loan processing costs
  • the advertising costs to be paid for the loan
  • loan opening and service fees

The example helps you to understand why outlining total costs is important, rather than focusing solely on interest, for example. Even a large loan does not necessarily make you happy if you find it expensive in the long run. The loans are not the same, so a comparison before making a loan decision is a good idea.

Loan Terms What are the terms and conditions of the loans?

Banks and finance companies often impose certain conditions on applying for a loan to ensure the customer’s repayment ability and reduce their own risks. In this guide, we will cover the most common terms that can be found on loans.

Loan size in relation to income

Loan size in relation to income

When applying for a loan, do not look blindly at your own income. Traditional banks often do not set a specific threshold for granting a loan, but pay more attention to the size of the loan in relation to its income. For example, many banks consider it a rule of thumb that the monthly installment of a loan should not be 30-40% higher than the monthly gross income.

Good Finance, on the other hand, grants True Credit a maximum of three months’ gross income of the borrower. In practice, all loan providers (except some express brokerage firms) require regular income from the borrower. The value of any collateral may also influence the loan decision.

Therefore, it is more important to understand the relationship between income and expenditure as the loan should always be able to be repaid after all compulsory expenditure so that little money is left to save even in the event of unexpected situations. For this reason, it is worth bearing in mind that banks are also businesses – the amount of credit a bank can offer is just above the customer’s ability to pay. You must always know your solvency and financial situation when applying for a loan.

Regardless of income level, it is particularly important to compare loans before applying. Doing so can save you huge sums of money and getting a cheaper loan within your ability to pay.

However, some lenders have defined minimum income thresholds below which a loan cannot be obtained.

The income thresholds range from € 16,000 to € 18,000.

If your own income and solvency are not sufficient for the loan amount required, some loans may also be applied for with a co-applicant.

Age limits for their loans

Age limits for their loans

In addition to income limits, banks also set age limits for their loans. Already Finnish law says that people under the age of 18 should not be able to get debt, which sets a natural minimum age for loans. Often, however, 18 years is not enough, as the maximum loan age can be 25 years. Age limits are also intended to reduce the risk of loss for banks: banks feel that a 22-year-old is better placed to repay a loan than a newly-aged 18-year-old.

The upper age limits, on the other hand, range from 65 to 75, although not all banks set straight age limits. Elderly borrowers are perceived as a risk due to possible death or illness.

Some providers, such as Good lender and Good Credit, offer a loan security service at an additional cost, which may help repay the loan if the borrower becomes ill, dies or becomes unemployed. Loan protection is also known as payment security or repayment security. However, you should carefully read the terms and conditions of the loan security, the terms vary greatly, even with the same loan provider: for example, Credit offers different collateral payment for 18-64 year olds than 65-75 year olds.

Living in Finland

Living in Finland

When applying for a loan, you should assume that the loan provider requires the applicant to be permanently resident in Finland. It is also often a requirement that the applicant has been residing in Finland for the last 36 months. In addition to the place of residence, a Finnish bank account is the basic assumption when applying for a loan in Finland. On the other hand, there are exceptions to the housing situation, and sometimes Finnish citizenship is sufficient.

The applicant’s place of residence is again linked to the risks mentioned above. Many lenders assume that reliable verification of defaults requires a long period of time, such as 24 months. If the borrower has not lived in Finland for a while, his / her credit history during the stay abroad is empty, which makes it difficult to check the credit history.

If the applicant’s credit history was cleared before moving abroad, you can try contacting your bank to explain the situation. In some cases, the bank may make an exception to this condition. However, it is good to beware that some loan providers are in a strict position.