Borrowing money through a so-called private loan or bank loan is often the only option when you need to borrow money and do not have any property that can be pledged for the loan. So you can use the money for whatever you want.
You can compare loans with good terms and without collateral
It’s easy to apply and get a Bank loan. All banks and lending institutions offer unsecured loans. In fact, mortgage loans are the most common type of loan in Sweden. To take out a loan, you only have to fulfill a small number of requirements.
First, one must not be too old. Normally, an upper age limit of 75 years applies. Since a loan is to be repaid over a minimum of one year, there is a risk that the lender will die before the loan is repaid in full.
Secondly, you normally do not have any payment notes to be approved as a borrower when it comes to bank loans. A payment note is, after all, a sign that you have previously had difficulties in fulfilling your payment obligations.
Third, one must be able to show what is usually called a “documented ability to pay”. In order to fulfill this condition, you need to have a fixed income of some kind, for example salary of employment or income from pension.
What are Bank loans?
For a car loan, home loan or boat loan, the lender’s security lies in the item you buy for the borrowed money. If you cannot repay the loan, the lender can simply take over the ownership of the house or vehicle and sell it at an executive auction.
Instead, for this type of loan, the borrower’s ongoing ability to pay is the lender’s security. This means that there is no property that the lender can sell to recover the cost of the loan.
This does not mean, however, that the bank loan is entirely without risks. Failure to pay your debts on time can lead to extremely harmful consequences
How high is the interest rate on bank loans?
The basic rule is that the greater the collateral you can provide for a loan, the lower the interest rate. For a unsecured loan, it is your own income that guarantees that the lender will get your money back.
Banks and lending institutions do not see this collateral as secure as a mortgage on a physical object, which is why the interest rate will be a little higher on a mortgage loan, for example on a mortgage loan.
The absolute highest interest rate can be paid on fast loans, which is also the smallest form of loans available. The reason why they become more expensive is because the maturity is so short. If fast loans would have as low interest rates as a mortgage loan, the credit companies would not make any money.
Since the maturity is as short as 1-3 months on a fast loan, the cost may not be so high anyway, but in percentage terms it will be very high.
Purpose of Bank loans
There are many uses for the loans in the Bank. The flexibility of the loan is one of its greatest strengths as you can use it to whatever you want. The question is just what you should use it for.
The absolute best purpose for a mortgage loan, or another loan for that matter, is as an investment. Investment does not mean borrowing to buy shares and funds. The return on these must then be extremely high to offset the interest you pay for the loan.
The kind of investments that blanc loans should be used for are things that give you direct or long-term value, or to offset a greater cost.
For example, a direct and long-term value is a home. By using your mortgage loan as the cash deposit, you receive a home that has its own value. Most often, the value of the home will go up or in the worst case, stand still.
This means you still have the money, they are just not liquid. So you can always get them back by selling the home.
Bank loans to offset a greater cost, for example, may be to use the loan to repair a water leak. A water leak can lead to water damage, which in turn leads to higher costs in the form of repairs and renovations.
It is therefore perfectly acceptable to take a Bank loan to repair the leak as early as possible to prevent major damage to the home. Another example could be obtaining a driver’s license or another education with his / her Bank loan. By educating yourself, you will have a greater opportunity to find a more high-paying job.
Low interest rate mortgage loans
We all want to get a low interest rate on our loans, which is actually the biggest cost when it comes to loans. Because the size of the loans is based on a subjective interpretation of the lenders using credit reporting agencies like UC, there are several simple methods you can use to lower your interest rate, no matter what loan you are looking for.
Collect your loans with a Bank loan
The bigger the loan you take, the lower the interest rate you usually get. This rule forms the basis for the concept of “collecting loans”. If you have a lot of less expensive loans, such as quick loans and sms loans, you can use a larger loan to collect them into a single loan with a lower interest rate.
Let’s say you have 10 loans of SEK 10,000 with 10% interest on each. By obtaining a loan of SEK 100,000 you can pay off your smaller loans.
Because you get better loans on loan loans relative to quick loans and sms loans, you usually get a lower interest rate. If you get a 6% interest rate loan, you save up to 4% per month just by collecting your loans.
High repayment capacity
First and foremost, the lender wants you to be able to pay off your debts on time. Both for their sake and for your sake. Your repayment ability is based on a variety of things that affect your finances and your disposable income, that is, the portion of your income you can spend on what you want.
The biggest factors in this are your income and your fixed expenses. But also things like marital status, children and how long you have worked and lived in the same place affect the lender’s interpretation of your repayment ability.
The best thing you can do to improve your ability to pay is simply to try to increase your income and lower your fixed expenses. This is easiest to do by making a budget and keeping track of their finances. It also helps if you live with a partner or equivalent and of course if you own your home.
Good credit rating
The other credit reporting company is looking at is your credit rating, ie how good you are at managing loans. If you often take out loans and you already have many loans taken out, it can be more difficult to take out a new loan.
The lender will note even if you do not pay your bills on time and become especially concerned if you have a payment note.
With such a note, it can be very difficult to get a loan with a low interest rate.
In order to maintain your creditworthiness, it is important that you pay your bills on time and make sure that you do not receive any debts from the kroner. As mentioned earlier, it is precisely in this way that you collect payment notes which are fatal to your credit rating.
It is also good if you try to repay your loans as soon as possible to get rid of your current loans.
Bank loan with co-applicant
Since two incomes are better than one, most lenders offer the opportunity to apply for a Bank loan with co-applicants. Applying for a loan with a co-applicant means that two people are under the loan and are both responsible for it.
For the lenders, this means that they dare to lend larger sums and with lower interest rates to the two individuals. Lenders are now looking at both of your economies and drawing a conclusion from both. If you both have a gross income of SEK 25,000 per month, the lender sees this as an individual with an income of SEK 50,000.
However, two people incur more expenses, which means that the parable is not completely accurate. But two people also increase the risk that one of you has, or receives, a payment note, which in turn reduces the possibility of a loan. It is therefore important that you not only have your finances under control, but also your co-applicants.
Loans without collateral – without consequences?
A Bank loan means that you have no collateral on the loan, such as mortgages and car loans. A person who is unable to pay his debts then risks getting rid of his home or his car for the lender to pay off the loan. In the same situation with a bank loan, the lender cannot do this.
But this does not mean that the loan is the same as a loan with no consequences.
If the loan cannot be repaid, the case can be transferred to the Crown Lender, who in turn can carry out a foreclosure. This means that the Crown Lender investigates what assets you have and how best to repay your creditors, that is, those you owe money to.
In order to repay your debts, the chancellor can then use a number of methods. Among other things, they may decide that you must give a certain portion of your salary until the debts are paid. Or they can use your current assets to sell and then give the profits to the creditors.
So, taking out a loan is not entirely without risks and consequences. You should therefore always be careful about how often and how large a loan you take. This is also why it is extremely important that you pay your bills on time and make sure to budget with debts, credits and other expenses in mind.