A private loan is a loan that is taken out without collateral. The form of the loan is also called interbank loans, which is exactly the same as private loans. It is one of Sweden’s most popular loan forms and can be used for any purpose. Unlike, for example, home loans, the borrowed amount can be used for anything and you do not have to leave anything in collateral to be granted. A private loan is usually in the order of USD 10,000 – 600,000. Private loans are a central product of all banks and lenders, and competition is high in order to offer customers the lowest interest rates and favorable terms.
What is required to take out a private loan?
Since no collateral is required to take out a private loan, the lender assesses your repayment ability instead. This is done by analyzing things like:
- Your age and income
- Your credit rating
- Your expected future income
- Possible payment remarks
It differs well in the requirements among the lenders. Some have very generous requirements and accept low-income and payment claims customers. However, these loans usually mean a higher interest rate. Generally speaking, you need some form of regular income to be able to take out private loans and the size of this puts the limit on how much you can borrow.
How to find the cheapest private loan?
When you borrow money, you obviously want to have as favorable a plan as possible. One should strive to obtain as low a loan cost as possible. The cost of the loan – the “price” you pay to borrow the money – includes interest and fees. It is important that you take both of these into consideration when doing your research, as high fees can easily offset a low interest rate at a low borrowed amount. To facilitate this, all lenders are required to account for the effective interest rate. The effective interest rate gives an indication of the total cost of the loan. This includes not only the interest rate, but also fees such as the setup fee, the management fee and other fees that the bank charges to lend the money.
The bank is obliged to specify an effective interest rate both in its offers on the website and in the personal offer you receive when you have applied for money. This makes it easy to compare the current cost of the loan before deciding.
Here are some great tips to help you find a cheaper home loan:
Read reviews and compare lenders
Here at Fundpeak Credit we continuously compare different lenders with their respective offers, as well as conduct basic evaluations of their services. So it’s a good start to review our reviews and find the lender you think is best.
Taking the time and carefully comparing different lenders is the absolute best tip for lowering the cost of your private loan. This is especially true if you want to borrow larger amounts of hundreds of thousands of kronor.
Use a loan broker
There are currently a number of services that are only intended to allow you to apply for loans from several different lenders simultaneously, with one application. This obviously means that you save a lot of time. You fill out an application online and it is then sent out to dozens of banks at the same time. You then get personalized offers from all of these and can choose the cheapest option.
Use the co-applicant
If you have a lower income, payment notes or otherwise a lower repayment ability, then it may be beneficial to use a co-applicant. This is a person who guarantees your loan and who is obliged to repay the loan if you cannot. This reduces the risk to the bank, which means that they can offer you a lower interest rate.
Do not borrow more than you need
This may seem obvious, but many are tempted to borrow “a little extra” when they are still granted a loan. Just keep in mind that a higher loan means higher costs and a longer repayment period. The less you borrow and the faster the loan is repaid, the lower the costs will be. This leads us to our last tip, when you have already been granted a private loan.
Pay off as quickly as possible
Do you have money over a month? Great, then use these to pay off your loan faster! Since the interest rate is calculated on the current debt, it is good to lower it as quickly as possible.
Another tip if you already have a loan is to renegotiate it regularly. This is especially true if your income has increased since you took out the loan. In addition, if you have current small debts and credits, it may be advantageous to take out a mortgage loan, to collect the debts under one and the same private loan. In principle, this always leads to a lower interest cost overall.