It can be a jungle to find the different types of loans that are offered, because new opportunities are constantly emerging to lend money. When a small amount is to be borrowed, many Danes resort to the more easily accessible and quick options, such as Kassekredit, quick loans and consumer loans, knowing that these can often be costly affairs in the longer term. However, these quick loans can seem attractive as often only a minimum requirement is set and it takes just a few clicks on the web to find the providers. If you choose one of these options, one must examine how they differ and what best suits one’s financial situation. Here is a quick review of the various options.
If you choose to have an overdraft facility in your personal finances
This means that you have an agreement with your bank that you can deduct a certain amount at a certain interest rate. Thus, you have a larger amount available in your account, and you only have to pay interest on the amount that you have an overdraft on the account. One such example could be that you can deduct 25,000.00 at an interest rate of approx. 6-7%. This can be an option for the person who has a fluctuating income or if you know that a short term debt will come in the near future. However, keep in mind that interest rates are expensive, so you should avoid your overdraft being too long.
Long Term Loans – What is the Best Choice?
If you know that you want a loan that should be for a longer period, a consumer loan may be preferable to a high cash credit. An unsecured consumer loan is often more expensive than other types of loans, since a consumer loan is often taken if you need to spend money on something that is not specific. So it is not a house or car you borrow money for, but more often experiences, such as travel or parties, or just different consumption. Thus, these are not things where the bank can pledge what you have bought, which the bank can do for example in a home or car purchase. Because the bank is unable to do so, consumer loans are often more expensive than other loans. Of course, it is also possible to take consumer loans outside your bank, but you must pay close attention to interest rates, as this can fluctuate a lot.
Mortgages are very similar to a consumer loan
These are often used if you want a quick payment with very few requirements for the documentation and the application process. Thus, there are few conditions regarding personal information or explanations regarding what the money is to be used for. However, this also means that, like the consumer loan, interest rates can be very high and one must think carefully before signing. If you choose this solution, remember to look at the annual costs (APR) which can fluctuate a lot between the different loans. The annual cost must be stated by the provider and you may be lucky to find a quote that is fair. In addition, it is important to remember that you only get the final interest rate on a loan when you get back the loan offer you have applied for, since many offers only offer a leading price when you first apply. Therefore, be sure to read it in small print before setting your signature. This advice applies not only to quick loans, but also to consumer loans and overdraft facilities. You need to be sure you understand what you are going into before you say yes.