What is a personal loan?

zobia zobia 30 June 2022 Follow
What is a personal loan?

What is a personal loan?

A personal loan is a loan that a private person takes out from a bank or other lender to, for example, buy a car, a trip, renovate a home, or cover some other major expense. Unlike a home loan, the bank usually does not require any security for a private loan.

Private loans for purchases

Sometimes we end up in situations where we need money quickly, for example, if the refrigerator needs to be replaced, or if a good offer appears for something you need for your wedding, a trip, a renovation, etc. Then a private loan can be an option. Since a personal loan is an unsecured loan, you can use the money for whatever you want.  

Private loans to collect loans

A private loan can also be used to collect several loans, such as SMS loans and credit card debts, in a single loan. It can be a good way to reduce the monthly cost and get better control of your personal finances for those who have several loans. Many banks offer private loans up to SEK 350,000 - 500,000. Collecting several loans is also called refinancing or debt consolidation.

Private loans, consumer loans, or unsecured loans

Dear child has many names. A private loan is intended for consumption and is therefore also called a consumer loan. The banks themselves often call private loans unsecured loans, which means that the borrower does not provide any security for the loan. This means a higher risk for the bank and therefore the interest rate is slightly higher for a private loan than for a home loan, where the borrower mortgages his apartment or villa.

Who can get a private loan?

Most people who have a fixed income can apply for a personal loan. When you apply for the loan, the bank makes a credit assessment to examine whether you have the conditions to meet the monthly cost of the loan. Keep in mind that 30 percent of the interest is deductible, but it is important that you do not borrow more than you are able to pay back. Use the loan calculator to calculate how much you can borrow.


common questions

What is amortization? 
Amortization is the amount you pay off the loan at each payment occasion. In addition to amortization, you pay interest.


What is the effective interest rate?
The effective interest rate shows how large the total cost of the loan is, including interest and fees, such as set-up and notification fees.


What is a credit report?
A credit report is the collection of information about a person's payment remarks, income, and debts. When someone takes information from you, for example in connection with you applying for a private loan, you will always receive a copy of the credit information sent to you, so that you can see who has asked for it and what information has been disclosed.

What is refinancing?
Refinancing is another word for gathering several loans and credits in one and the same loan. By accumulating your loans, you can often reduce your total monthly cost. 

Also, check out our glossary for personal loans.

re: member private loans: The interest rate is variable and determined individually, the annual interest rate is currently 4.95% - 19.95% (2022-01-01). Repayment period 1 - 15 years. Based on a loan of SEK 100,000 repaid for 5 years, a set-up fee of SEK 395, you pay between SEK 1,892 - 2,657 per month when paying with an e-invoice, effective interest is between 5.23% - 22.10%, and the total amount to pay is between SEK 113,537 - 159,424. Lender: Entercard Group AB (org. No. 556673-0585) 105 34 Stockholm. The company is under the supervision of Finansinspektionen. For full terms click here.

 

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