Should You Try a Forbrukslån?
If the past few years have shown us anything, it is how easily we can end up in an emergency where we need money. With all the get-rich-quick schemes that exist in the world, it’s hard to locate legitimate sources of aid and loans that we can use to prop ourselves up and out of crisis.
Obviously, there are many methods you could take. Some of us prefer to get a new credit card or get a cash-advance from our current company, for example. You could always try to borrow from friends or family members, though this can come with plenty of complications – it’s typically what I consider to be my last resort.
Getting a private or personal loan is another option. It’s important to take a close look at interest rates for something like that, though. If you’re international, your choices naturally expand. You might consider a Norwegian company, for example, in a situation like this.
A forbrukslån is a form of cash advance or loan. As I’ve already alluded to, they can be of use when you find yourself in a bind. They can also assist in meeting certain goals like car ownership, though. Continue reading for some practical applications that give you an idea of why you may try them.
Where Can You Get One?
Let’s start with something simple – what establishments offer them? Well, obviously banks can. This is probably the main type of financial institution that we think of when it comes to any loans or forms of money. However, they are not the only option available.
Credit card companies are one. You can get a cash advance from your regular credit line, in fact – just inquire with your provider if this is something you are curious about. Additionally, there are many online websites that offer this service.
Finally, credit unions are a reputable source of personal loans. They are best approached when you already have an account with them. This means there is already some trust established between you and them, which is good for both parties.
The Different Types
If you are considering getting one, you should know there are a variety of forms, each with its own pros and cons. The most typical one you will run into is known as unsecured. This means that they do not require any collateral from the person receiving the money.
The main negative of this is that lenders face a higher risk for them. This incentivizes them to raise interest rates or any other fees. Combined, this is known as an annual percentage rate. You may have seen it referred to as APR.
Because there is no collateral offered in this type, usually your APR is based on what your credit score is. So, if you have low credit health, you will likely face higher rates. However, the main positive here is of course that you do not have to offer your home or car up to be seized if you cannot pay it back.
On the flip side of this are secured loans. The most common form of these are mortgages, which most of us have heard of. If you cannot pay back on a mortgage, your house can be taken back by the bank.
A lot of online lenders will allow you to offer your car as a form of security, too. Because these are generally safer for the lender, the borrower will have a lower APR. Of course, the risk is losing your collateral. It’s up to you what you place more value on in the long-term.
Next, there are personal lines of credit. Sometimes these are called cash advances, which you can read more about here: https://www.cnbc.com/select/what-is-a-cash-advance-and-how-do-they-work/. It is more like a credit card than the other types, because it is revolving. This means that when you pay it back, that credit is restored, and you can spend it again.
You could consider a fixed-rate loan. This means that you will pay back in installments – they will always remain the same. When your payments don’t change, you can budget easier, which is the main attraction of this category. However, you might end up in debt for a longer period depending on the amount of your monthly installment.
Another form of forbrukslån is the other side of the coin to the above – a variable-rate one. With this, the institution you are borrowing from will set a certain benchmark amount. Based on that benchmark, the rate on your loan can fluctuate. This includes your interest and payment amounts.
This is best if you are going to have a quick repayment plan. The benchmark set will probably not change much over a short period, but if you are thinking in the long-term, it might not be the best choice. However, they attract some borrowers because of their lower APR rates.
Another to consider are known as debt-consolidation loans. These are designed to allow you to combine various debts that you have into one lump sum, versus several different payments in each month. If you have many credit cards, it is something you may want to consider.
Ideally, they will provide you with a lower overall APR than the combination of your previous debts. However, if this is not the case, it might be a risk you don’t want to consider even given the convenience of them. You’ll have to weigh the pros and cons yourself and decide that way.
If you’re newer in the financial world and don’t have much credit history, you might need to think about co-signed or joint loans. A lot of college students in the United States must do this to pay for their education. This isn’t the case internationally, but many young adults still end up needing co-signers for their first loans.
This gives the lender added security, by having a trusted adult who makes enough money to pay them back sign off on you and your lending power. It may be required for anyone with a lower credit score, as well.
Finally, let’s discuss buy now and pay later ones. These are usually on a much smaller scale than the prior entries in this list. They are often offered by online e-commerce websites and retailers. Essentially, they allow you to purchase a product and pay for it in smaller installments. An example would be four payments of twenty-five dollars for a one-hundred-dollar item.
Are They Worth it?
Of course, this is the big question that you’ve probably been wondering about this entire time. To some extent, this is something you need to decide for yourself. Me telling you definitively “yes” or “no” can’t really be done, because I don’t know your financial situation.
However, there is some guidance that I could give. What’s important to remember is that you should not get a personal loan frivolously. Taking one out to purchase unnecessary items or to live above your means is not recommended.
If you want to get your first car, though, there’s probably not harm in getting one for that purpose. Another common utilization is for a wedding cost. Planning a dream wedding gets expensive, after all, and we may not have all the cash up front. That’s an appropriate occasion to use a forbrukslån (as long as you are confident you can pay that money back).
Financial literacy is a difficult beast to wrangle, no matter the topic. Borrowing is one of the trickiest things to contend with because of the subjective nature of many decisions. Once you are educated on the different options out there, though, you can use this knowledge to help you determine if they are right for you.
So – reflect on the different types and whether you think they would be a viable option for your own needs!