Taking a consumer loan: borrowing money to buy things
Is it really a good idea? Has it become too easy to take out fast loans now that there are so many lenders offering quick payouts and weekend payday loans? Isn’t it better to save money and then buy what you need or want for money you have at the bank?
Of course, the optimal is if you have enough money without having to borrow. But to borrow USD 150,000 to renovate eg. A kitchen can be smart from an economic perspective, especially if the kitchen is down, and you need to do something about it shortly. Saving that amount together takes a long time, and when you have reached the goal, probably the same work has become USD 50,000 more expensive.
What is a consumer loan?
A consumer loan is not a single type of loan. It is a collective name for different types of unsecured loans, such as private loans, quick loans and sms loans. Credit card purchases and installments are also usually included here. However, it is usually private loans, or blank loans, when referring to consumer loans.
The purpose of taking out a consumer loan varies, since you can do basically what you want with the money, unlike for example a mortgage loan. Some of the most common reasons for borrowing are:
- Buy a car or caravan
- Renovate the house
- Solve other, expensive loans and debts
- Attend an education
In recent years, it has also become increasingly common for the consumer loan to be used to pay the cash contribution in connection with the purchase of a house. Today it can be difficult to get a loan for the entire purchase price, and today it is estimated that about 10% of all mortgages are made with a supplementary private loan.
Many also choose to apply to lenders who offer loans without UC (credit check at the Information Center). This is so that the ordinary bank will not be able to see that someone has taken a credit report on you.
Who can get a consumer loan?
Anyone can actually apply for a blank loan. What matters is whether you have any kind of income and that you have the resources to pay off the loan. It is even possible to get loans despite payment objections – some lenders accept quite a few objections.
However, it is very rare that you get a loan application granted if you still have a debt that lies with Kronofogden. In principle, the only possibility is if you get someone in the family to benefit you by acting as guarantor for the loan.
Interest and fees
A consumer loan is a loan where you usually do not need to have any collateral as collateral, should you find it difficult to pay off the loan. The lack of collateral causes the lender to take a greater risk than otherwise, and therefore they usually charge higher interest rates on this type of loan.
Another way is to compensate with higher setup fees and newspaper fees. Therefore, it is very important that you compare the lenders carefully, to get a picture of what the total cost of the loan looks like.
We at Cream Credit want to make this work as easy as possible for you, as it can be quite tricky to calculate what is actually the effective interest rate, and what differentiates the different lenders.
That is why we have gathered all banks and credit institutions on one site to avoid surfing around with lots of mortgage companies. Here you can see immediately what your loan costs, and what conditions the lenders set to lend you money.
If any questions arise along the way, you are most welcome to contact us.
What does a consumer loan cost?
A loan is never free, except in rare cases where you can get small loans without interest, and a consumer loan can be more expensive than a secured loan, just because you have nothing to pledge for the loan. The lender thus takes a greater risk. If you have a security for the loan (the house, the car etc.), the lenders are safer in giving you lower interest rates on the loan.
So in general, it is always cheaper to borrow with security. Here, however, there is a reason to look for something before signing the loan application. No other hidden fees may be found, and check out how it is with setup fees, newspaper fees etc.