Let’s say that last year was difficult for you financially. Maybe you were faced with an unexpected medical bill when your beloved Fifi decided to chow down on the living room rug. Retrieval surgery cost you thousands of kroner, and you were forced to put the money onto your credit card. Now you’re watching the total you owe go up each month even as you continue to make your minimum payments on time.
Or maybe, as a substitute teacher, you were unable to work for months at a time due to the lingering effects of the Coronavirus pandemic. You had to live off of your savings, which only lasted you for so long. As a result, you started putting your essentials like food and rent on your credit card. Now that you’re back to work, you’re still finding it hard to make your payments.
Or maybe you’re in the opposite situation. You have very little debt, you’re working full time, and you’re considering finally remodeling your kitchen so it’s just the way you want it. Maybe you’re dying for a new island to make prep time easier. Or perhaps you’re interested in installing a brick oven in the back yard to make your homemade pizzas come out crispy and delicious.
Or you could be itching to travel to the Black Sea to float on the surface and feel the healing effects it can have on your skin and body, but you just don’t have the funds right now in order to do that.
If any of these situations sounds close to home, then obtaining a consumer loan might be just the ticket for you.
In this article, we’re going to walk through the five steps you need to complete in order to secure the best loan for your situation. Let’s get started.
- Calculate Your Needs
The first step in your process is pretty simple. You’ll need to know how much money you want to ask for when you apply for a loan.
If, for example, you’re trying to pay off Fifi’s vet bills, you’ll want to take a look at your credit card statement in order to find out how much you owe. You’ll want to ask for a loan that will enable you to repay your debt.
At this point you may be asking yourself, “Why should I do all this work when I already have a credit card? Couldn’t I just continue the payments as they are until I have it paid off?”
That’s a very good question. The reason you might want to consider a loan is because the interest rates are typically much lower on a loan than on your credit card. On average, you can expect to pay between five and ten percent on your consumer loan.
On the other hand, you could be paying as much as twenty percent a month on your credit card bill. That’s a difference that will add up fast. Click here for more information about credit card rates in Norway.
If you’re looking to remodel your kitchen, this might be a more extensive process. You’ll want to draw up a list of the work you want done and then consult with a contractor or three to get an estimate for the work.
It’s vital that you do your research here before you move on to the next step. You may think it will save you time to simply make an estimate and stick to it, but it may cost you in the long run. Many times banks will have different interest rates depending on the amount of the loan, as well as the amount of time you request in order to pay it back.
This means that you may end up saving yourself money by asking for more up front, if you need it. Wild, isn’t it?
- Consult a Loan Calculator
Once you know the amount you’ll need, it’s time to take the next step. There are many tools online to help you compare rates between different banks. Click the link: https://forbrukslån.no/ for one such tool.
You may notice that there are a few different options to toggle between on the calculator. Each of these options influences your monthly payments. The first, and most obvious, is the amount of your loan. The higher your loan, the fewer options you may have in banking institutions.
The next criterion is the term of your loan. This means the amount of time you have in order to pay back your loan. The longer the term, the lower your interest rate may be. But keep in mind, just because the interest rate is lower, that does not mean that you will end up paying less.
That is because you will really need to look at the APR of the loan instead of the interest rate. APR stands for Annual Percentage Rate. This number takes into account any fees that you will be expected to pay in addition to the interest on the loan.
Some loans have startup fees. Others charge for your monthly payments. No matter what the circumstance is, you’ll want to have all the information before you agree to any one loan.
You’ll want to be sure to check all the relevant information before you move on to the next step. Taking the time to do your research could save you lots of money in the end, so it is really worth it.
- Time to Apply!
Once you’ve selected your amount and found a timetable that works for you, you’re finally ready to take the next step. You are ready to send in your loan application.
This is another step in the process that will require some patience. This is because you’ll want to apply to several different institutions at once.
The reason for this is because each bank has a slightly different way of determining what their rates will be. Some might take age into account more than others, for example. Another thing that can change loan rates is your income level.
The only way to know which loan is going to be most advantageous for you is to apply and see exactly what the terms will be. Make sure to take into account the total amount you will be paying as well as the amount of your monthly installment.
If you’re due for a raise but haven’t received it yet, don’t make your payment schedule with that raise in mind. Work within your reality in order to get the best results.
Many banks offer you the opportunity to pay your loan back sooner than expected with no penalties, so you’re always better off being conservative when setting your initial terms.
By this point, all of these numbers might have your head spinning. If so, there is an option that might be beneficial to you. You may want to work with a loan officer. This is a professional who has a relationship with several banks, not just one. They are able to compare terms for you and help present you with the best deal.
The good news is that the service is often free to loan customers, so it can definitely be worth checking into.
Make sure you have all of the relevant information at hand when you do decide to apply. This means your tax returns, old paystubs, and other documents that demonstrate how much money you earn. The more you earn, the more likely the bank is to offer you optimal rates on your loan.
- Compare Results
Once you’ve sent in all your paperwork, you’re ready to sit back and watch the offers roll in.
Your loan officer might be there to walk you through the process at this point. If not, never fear! You’ll have to compare the effective rates on each of your offers to find the best one.
The effective rate is different from the interest rate because it reflects all fees that will be applied to you. Although using the loan calculator will help give you a ballpark estimate of these fees, only the loan offer is specifically tailored to you. You will have to hold off on making a final decision until all of the information is at hand.
- Sign on the Dotted Line
Once you’ve received your offers and selected the best one, you’re nearly finished with the process!
The only thing left for you to do is to sign your loan agreement. This step is easier than you might think. With the advent of a BankID, the process is easier than ever before. You can sign your paperwork at home and receive your money all without ever stepping foot inside a bank!
If you don’t have a BankID, it can be a good idea to check with your home bank. This means the bank that you routinely conduct business with. It does not necessarily need to be the same bank that you are getting a loan from.
Remember that you’ll want to choose the one with the lowest effective rate. While it may seem simpler to have everything localized in one institution, it could cost you hundreds of kroner to do so.
Once you’ve done all this, you’re nearly there!
You can expect to see your funds within a few business days. Some banks are even able to transfer the money on the same day you sign your application.
Applying for a loan doesn’t have to be a long, drawn out process. If you follow these five easy steps, you could be on your way to your financial goals in as little as a few hours. Good luck!
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