Credit loans are a great way to build your credit. They are also a substantial way to have money on hand that you may not have available. But to truly understand them, and not to mention use them effectively and responsibly, it is best to go over a few details about loans; starting with what they are.
What are Loans?
A loan is basically the sum amount of money that you borrow from a financial institution, such as a bank, credit union, or online lender. Once it is loaned, you are responsible for paying it back in full at a later date, typically with interest attached. All loans have some of the same attributes as others, and there are different types of them that are available to you depending on what you use them for.
How Do They Work?
When talking about the intricacies of loans, it’s important to know that there are four different but primary aspects to them. They include:
- Principal- the amount of money that the borrower borrows from the lender. The minimum or maximum of the principal can and will vary by bank or other financial institutions.
- Interest- the interest, or interest rate. This is the actual cost of the loan; the amount that you are required to pay back in addition to the original principal fee that was borrowed. Lenders determine the interest based on a variety of factors, including credit score, the type of loan being asked for, and the amount of time you need to repay the loan. The interest is completely different from the annual percentage rate (APR), which includes other costs.
- Installments- installments are payments made over time, typically monthly, to the lender. The installment is usually a fixed amount to be paid and rarely changes.
- Term- the term is the amount of time that the borrower has to repay the loan in full to the lender. Depending on the loan amount and the type, the term can last anywhere from just a few weeks to many years.
Types of Loans
There are a multitude of different loans available, but they all fall mainly into two categories: secured or unsecured.
- Secured Loans- in secured loans, the lender is given the money they wish to borrow in exchange for collateral, which is a physical asset that the lender uses to secure their money should you not be able to repay the loan as originally agreed. Things such as your interest rate are based upon the assets offered as well as your credit score and/or credit history.
- Unsecured Loans- in unsecured loans, the opposite is true. You are able to borrow money from the lender without having to offer collateral. Because of this, interest rates tend to be higher than secured loans.
Other types of loans include auto loans, student loans, mortgages, personal loans, payday loans, and more.
So now that we know more about loans, we can talk about how to capitalize on them, and how we can borrow up to a large amount of money; specifically, how we can borrow up to 500,000 NOK.
Why Would you Want 500,000 NOK
If you need to access money quickly, borrowing 500,000 NOK is a great way to do it. You can use it to pay off other loans, finance personal or business ventures, and more. Whatever the money for, 500,000 NOK is the best way to finance your goals.
Advantages of Borrowing 500,000 NOK
Here are some advantages to borrowing such a lump sum of money:
- Saving Money- more loans mean that you pay more in hidden costs. By asking for a loan of 500,000, you can collect all the small loans into one. This way you don’t have to pay more than what is necessary for the loan.
- Get a Better Credit Rating-this is advantageous for getting more sufficient terms when applying for subscriptions and loans. Poor credit scores can result in rejection. You can find out more about your debt at places such as the Norwegian Debt Register
- Deleted Payment Notes– if you happen to have outstanding payment notes and payment claims, they will be deleted as soon as you pay off the loan. This in turn will reward you with a better credit score than the one you had before.
- Better Overview of Finances– it will be easier to manage control over your finances when you do not have to deal with as many small loans or as many banks.
- Reduced Risk of Non-Payment– more money to spend and a better view over your finances will make you better equipped and ready to pay the loans on time.
What You Need to Apply
To apply for a loan of 500,000 NOK is as simple as getting an application and filling it out. You do, however, need two more additional items on hand.
- BankID-you will need access to the internet and the BankID application. With this, you can verify that you are indeed the person that’s applying for the loan, and doing so is safe and easy to do when using the app.
- Personal Data- It would be best to get an overview of your personal debt and personal income. When you apply for the loan, you will need to have on hand your address, social security number (SSN), and information pertaining to your income, fixed expenses, and any other existing debts.
- Credit Score- when the bank has received your application, they will check how reliable you are with payments. They do this by checking your credit score, which will detail your debts, sources of income, and fixed expenses. Though a lot of places are stringent when it comes to these categories, you can still be granted a loan even if your income is low.
What is the Cost?
In order to avoid potentially having to pay unnecessary large amounts in hidden costs on your loans, it is advised that you every so often take a look at how much you pay for interest, invoice, and termination fees. These are the costs that are often overlooked and forgotten by most borrowers. These costs can and will vary from bank to bank, and like the other type of loans, the interest is also calculated in accordance with your credit score.
- Interest-be aware of the difference between nominal interest rate and effective interest rate. If you need a refresher, or want to learn more, click here
- Fees-a lot of the banks today have a multitude of fees. These include invoice fees, termination fees, establishment fees, and more. The amount of these will all depend on the size of the loan that you’re taking.
- Collateral- This depends on the bank or loan, but it is possible to take out a loan with or without collateral. With collateral attached to the loan, you are able tobe considered for lower interest rates along with a longer repayment period over time.
Different Types of Loans on Offer
There are a multitude of offers on loans available from many companies. However, since there are more than a few, I will only go over some of them below. Keep in mind that you are not beholden to choose any of the suggestions listed below, and that you can find other offers for sales of fem hundretusen, or 500,000 NOK, on other sites as well.
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Sambia
The loan amount ranges from 5,000 NOK to 500,000 NOK ($456 to $45,621). The effective interest rate ranges from 6 to 49%.
Minimum Age to Apply- 18 years old
Income Requirements-120,000 NOK
Repayment Period- 1-15 years
Advantages- opportunities to gain very good terms, efficient and simple application process, applications are replied to within 24 hours, swift disbursement of the loan applied for, has one of the lowest minimum ages to apply, also offers car loans and loans for refinancing, and debt insurance.
Disadvantages- does not offer loans on day of application, has no information on maximum effective interest rates on consumer loans.
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AxoFinans
The loan amount ranges from 10,000NOK to 600,000 NOK($924 to 54,800). The effective interest rate ranges from 5% to 21%.
Minimum Age to Apply-20 years old
Income Requirements- N/A
Repayment Period- 1-20 years
Advantages- company collaborates with Norway’s leading banks, offers loans from as many as 25 banks, and is able to secure large loan amounts up to NOK 600,000 (approximately $54,800). The application process is straightforward and efficient, and all applications are available for free and are non-binding.
Disadvantages- no guarantee that you will get the offer.
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Scoopr
The loan amount ranges from10,000 NOK to 500,000 NOK ($924 to $45,621). The effective interest rate ranges from7 to 27%.
Minimum Age to Apply- 18 years
Income Requirements- 120,000 NOK
Repayment Period- 1-15 years
Advantages- great customer service, possibility for low interest rates, able to obtain many offers from loan broker, usually responds within 1-4 hours, has loans of all shapes and sizes.
Disadvantages- they work with a smaller number of banks when compared to their other competitors.
Conclusion
Knowing about loans is important. That’s especially true when venturing to borrow up to 500,000 NOK in loans. You have the knowledge to do so efficiently, now it comes down to your personal choice and your discipline when choosing the best loan for you.