Guide: Smart loans – the 5 tips
When you borrow money to buy a product such as a trip, a car or a construction project, you end up paying more for the item than if you had the money in your account and did not have to borrow. This is due to the interest and fees that the loan provider takes to borrow money. Therefore, saving is always cheaper than borrowing money.
What do you need to borrow money for?
However, this does not mean that it is always a bad idea to borrow money.
For example, if you borrow money for a new carport or a renovation project in the home, this will often be associated with an increase in the value of your home. In addition to enjoying a new carport or a new kitchen, you can sell your accommodation more expensive. It is smartest to borrow money for goods that do not fall rapidly in value.
In some cases, however, it may be smart to borrow money, even though the item is “used up”. For example, if you plan to travel to Australia, you can save money by buying the airline tickets at the right time.
If you do not have the money in your account when the ticket prices are the lowest, it may be smart to take a loan for the trip. In that case, it is important to set up your loan for a short payback period so that interest rates are kept down and so you do not have to pay off the loan long after you come home from Australia.
Avoid the little ones for “quick” loans
Quick loans, lightning loans and SMS loans can give the impression that you get the money into your account particularly quickly. Few people know that “quick” and “quick” do not relate to the time it takes to get the money into the account, but to the time you as the borrower have to pay back the money. In the United Kingdom and the United States, this type of loan is often called payday loan because the loan is used to cover the account deficit until the next payday.
The short payback period often means high interest rates and fees, ie. a high APR. If you do not repay the loan quickly, the “quick” loans such as quick loans often end up being expensive compared to loans typically repaid over one year or more and you end up paying far more than you need.
“ Advice 2 #: Avoid choosing a loan provider based on speed
Therefore, always look carefully at the APR before borrowing, and consider how long a period you want to repay the loan, as short-term loans typically have a significantly higher APR a loan with a maturity of 1 year or more.
Spend time informing about your finances
When the banks ask you to fill in some information about your finances, it is to use your information to credit you and, among other things, Secure yourself against overpayment. That is, the banks assess your finances to ensure that you will not borrow more than your finances can bear.
It is therefore an advantage for you as a customer that the bank has a comprehensive overview of your and your potential co-applicant’s financial circumstances, so that they can make such an accurate assessment of your ability to repay the loan as possible.
In order to secure yourself a good credit rating and thus increase your chances of getting good deals from the banks, it is important not to borrow more money than you need. By searching with a co-applicant, you are more likely to continue to pay your repayments even if you or your co-applicant loses the job, or becomes incapacitated, so that the bank does not lose its money. The advantage to you is that the bank more often approves a loan application and that interest rates are often lower than what they can offer if there is only one applicant.
” Advice # 3: Be Honest and Thorough When Informing Your Finance and Consider Searching with a Co-Applicant
A large part of the information that the bank must use can be downloaded digitally by the bank or Ananse, and information on income basis, CPR number, NemID and consent to e-SKAT ensures that no one abuses your information and apply in a different name than their own, and partly that the banks can process your application faster and more accurately.
And of course you always have to be honest when you describe your situation. Banks are obliged to credit you and you risk being rejected on the back if your information is not correct or you have forgotten to provide all relevant information.