Loans in Sweden - everything you need to know
Loans are in their simplest form an agreement between a lender and a borrower about the loan terms.
The lender has the funds available and lends them under specific criteria, often through an interest rate of some sort, and some additional fees. This is considered the payment for borrowing the money and is paid back monthly, quarterly, biannually, or annually by the one who borrowed the money.
As the agreement is made, certain aspects like amount, runtime (how long the period for returning the money is), and interest rate must be set. This is often done by banks to consumers, where banks have the funds available to them and lend them to their customers under a specific contract.
Example:
An example of a loan like this could be an amount of 100.000 SEK, over a runtime of 8 years (96 months), with an interest rate of 7%. With fees included, the final repayment for this loan is around 140,000 SEK. However, this amount is split over 96 terms (months), with a monthly payment of 1377 SEK (fees included).
Usually, you would need to consult a local bank to sign up for a loan, but as online banking has become more and more popular, there are several lenders offering convenient online loans. While most traditional banks require a thorough investigation of your financial standpoint regarding monthly income, budgets, last year’s spending and much more, online banks only require minimum information, which makes them more accessible. Some online lenders might also offer lower interest rates, since they are not burdened by paying rent for a physical subsidiary in the area.
To apply for a loan, you must fulfill the following requirements:
Minimum age requirement
Place of residence in Sweden
Swedish citizenship
A stable income source
A type of identification security tool
No payment remarks
Some banks might have a minimum age requirement of 21 or even 25. This requirement often comes with bigger loans, so there are still plenty of loans available to you even if you are only 18.
In connection with bigger loans, some financial institutions might require a Swedish citizenship and/or that your place of residence is in Sweden.
Since banks offer the loans on the basis of getting back the money after the runtime has passed, they require you have an income source. If you have no income source, you cannot pay back your loan with the added interest, which in turn means you will not be able to take a loan in the first place.
You will also most likely need a type of identification security tool that is approved by Swedish authorities. This is so that you can sign off on your approved loan offer, and prove that it is you to the lender that is actually agreeing to the terms of the loan; an online sign off as opposed to a physical one on paper.
Finally, the loan institutes have restrictions regarding the presence of payment remarks or active enforcement proceedings with the Swedish Enforcement Authority (Kronofogden)
Here is an overview of the loans offered by online lenders in Sweden, which you can also find right here on Moneezy:
Classic loans
Consumer Loans (Konsumtionslån), Quick Loans (Snabblån), Personal loan (Privatlån), and Unsecured Personal Loans (Lån utan säkerhet) are the four different loans that follow the classic loan structure in Sweden. You apply for a loan of a certain amount, as well as decide on a runtime for paying it back with the added interest and fees. The different terms are mainly used to distinguish between small and big loans. SMS-Loans (SMS-lån) are mainly focused on smaller loans but are available within a couple of hours through SMS or an online application.
These loans can be used for a lot of different things. The smaller loans can be used for an unexpected expense that has come through, an emergency that must be taken care of, or investment in an item you've wanted for years. The bigger consumer loans are more suited towards initiating start-ups, loans for property or vehicles, as well as energy optimization or renovations in your home. The possibilities are endless, which is why the consumer loan is the most common loan.
Special loans
Consolidation Loans (Konsolideringslån or Samlingslån) is a term for combining several smaller loans into one big loan, to avoid paying huge interest for several loans at a time.
These are especially useful when consumers have taken several small loans and are now burdened with several payment dates and different interest rates.
Lastly, we have Overdraft (Kontokredit), which allows you to exceed the amount of money on your account by a set amount each month, without paying the normal fees. This is especially useful when conducting a big project, for example a house renovation, where unexpected expenses can come out of nowhere.
The loan is only active if your account experiences overdraft, and the loan will cover the rest of your expenses.
Once next month’s paycheck comes in, the loan is automatically paid off with a small interest rate.
Compare loans with Moneezy
It is always important to weigh all your options and compare them to each other, so you find the best one for you. Therefore, using an online comparison instrument could be a good idea. Our website Moneezy offers precise this! We've developed a service just like this, completely free of charge, that you can use to compare the available loans related to the criteria chosen by you.
Through our parent company Intelligent Banker, we have over 15 years of experience. Since 2018, more than 950 000 loans have been granted through our platforms. Moneezy is available currently in 17 international markets.
Use Moneezy to get the best overview of the loan type you're interested in. This way, you can make the best choice for yourself, an informed decision. Remember that no one knows your financial needs better than you do!
Pros and cons with loans:
Loans that suit your situation
Allows you to realize your projects
Transparency throughout the entire process
No loan justification
Convenient and flexible
Lifestyle inflation, where you spend more money because you have more money
Debt, if you are not careful with your budget
Reckless spending
Extra fees if you do not comply with payment dates
If you are not realistic and thorough in your planning of your budget in connection with your loans, you can end up having trouble paying them back over time. Furthermore, if you apply for a loan to spend on devaluating assets such as technology, fashion, vacations, and trends, you are not looking at investments, but rather at reckless spending, something to avoid using loans for. Being mindful and intentional about your loans is the most important aspect. But if you keep these risks in mind when applying for a loan, they can be a great source to realize projects.
You need to make sure to keep up with the payment agreement that you and the lender have agreed too. If you happen to forgo a payment date and continue to not pay it, additional fees can be added and if you keep it up like this long enough you might get a payment remark. This can prevent you from getting future loans approved as it means you are marked as a bad payer. Contact your lender as soon as possible if you know you're gonna have issues making a payment on time!
It is always important to weigh all your options and compare them to each other so you find the best one for you. Therefore, using an online comparison function could be a good idea. Our website Moneezy offers you this, where we have made a service just like this, completely free of charge, that you can use to compare and contrast the available loans related to specific loans of your choosing. We have over 10 years of experience and have helped over 500 000 customers with their financial decisions, and you can just like them, sit back, relax and take a look at our pages to get the best overview of the loan type you're interested. This way, you can make the best choice for yourself! Remember that no one knows your financial needs better than yourself!
3 things you to take from this article:
There are many different types of loans in Sweden which are available to YOU.
There are always some requirements to you as a person looking to borrow money from a lender.
Carefully evaluate your decision to take a loan, and do so before signing anything binding.
