The 5 Biggest Mistakes We Make When Looking For Consumer Loans

This is a good reason why we often talk about consumer loans. Consumer loans are quick access to money compared to other types of loans. The term consumer loan belongs to loans without collateral and credit card loans. About half of all consumer loans are credit card loans.

If you want access to money, there are not many different ways it can happen. You do not need the government to limit your access to money, but rather that you are aware of the mistakes that a potential borrower can make in pursuit of the optimal consumer loan. This blog just addresses the 5 biggest mistakes we make most often when searching for consumer loans.

Think through the loan process

Think through the loan process

When you stand there and want to take out a loan, it is important to think carefully. It is often silly to take out a loan on impulse. Then the chances are that you are taking out a more expensive loan than you might otherwise have gotten bigger. This is precisely why the Consumer Ombudsman wants consumer loans on impulse to life.

When considering borrowing, it is important to think through several aspects of the consequences of borrowing money. It costs to borrow money, but how much does it cost to borrow exactly the money you want to borrow? Your personal finances will quickly incur an extra cost of USD 3-8,000 each month when you agree to a consumer loan.

Can you handle personal finance? Many have a generous private economy, but when you first look over your finances you may see that there is no room to pay a larger bill each month without affecting other things that you do. It is boring when you have to sacrifice weekend trips or city tours with friends because you have to pay for a bill you would not have needed to pay.

Do not take out a larger loan than you need

Do not take out a larger loan than you need

The whole point of loans is to get money. The money must of course be repaid. The size of the loan, the interest rate and the repayment period determine how much to repay each month. If you take out a smaller loan you will probably pay a smaller amount per month than if you take out a large loan.

We recommend anyone who wants to borrow money or is planning to borrow as little as possible. Calculate how much you need to borrow and borrow this sum, or preferably a little less. Consumer loans are one of the most expensive loans you can take . When you take out the loan you probably know how much more you have to pay on the loan a month.

It is important that you do not spend all available capital each month on the loan. You need money to spare every month for faster repayment or savings. Therefore, you must not raise the maximum loan amount that you can borrow or that you are offered.

Stay away from high interest rates

Stay away from high interest rates

It costs a lot of money to borrow money. It is therefore important that you have a good economy that can handle these higher costs. The Financial Supervisory Authority is concerned about precisely the high interest rates on the consumer loan. At the end of 2017, the Authority wrote that 14 per cent of household interest expenses consisted of interest on consumer loans. This is quite high as only 3 per cent of the total loan debt is consumer loans.

All loan intermediaries and banks are required by law to disclose the loan’s interest rate and other costs. Interest rates are referred to in two ways: nominal and effective interest rates. The nominal interest rate is the loan interest rate without any other cost of the loan being baked into this interest rate, while the effective interest rate is the percentage that shows how much the loan costs you per year.

Choose the shortest repayment period possible

Choose the shortest repayment period possible

There is a lot of talk about interest when it comes to loans. The monthly cost of the loan also receives a lot of attention, where it is quickly made to use the monthly cost as the deciding factor when deciding whether or not to make a loan.

Do not forget the down payment time as the down time affects the total cost. How much does the repayment period actually cost you over a longer period?

The portal provides access to data that hears that you can access information about banks and their interest rates. If you set up an overview of how much the interest rate is and the time period you get a little insight into how the repayment period plays out.

Do not live on the consumer loan

Do not live on the consumer loan

It is expensive to be poor, there is something called. If you are unable to cover your monthly expenses with your monthly income, it may be tempting to take out consumer loans to meet your money needs.

Do not do it. High interest rates and higher monthly costs can quickly cause your personal finances to become tighter than they were before you took out your consumer loan.

Conclusion

We have talked about how it is first and foremost you who are responsible for the repayment of money that you borrow. When you borrow money, it is important to be aware of some simple things that can save you a lot of money. If you find it difficult to remember all these things, we recommend you write down the five factors so that you see them when looking for loans. Finally, we want to emphasize one thing in particular: loans cost money.

Therefore, be careful about tying costs to your personal finances as these are costs that you will soon be left with for many years to come. Such costs can quickly affect your future choices such as home buying, marriage, when you have children and education. You are smart. Used your head and think about how a loan affects your situation. Remember that only you know your situation best.

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