How long have you considered taking out a personal loan? The current trend is for individuals in Norway to rely on these credits for home renovation projects, holiday travel, or refinancing.
The surveys done into consumer financing have demonstrated that individuals between the age of thirty-five and forty-nine are the prominent customer group. The number of young borrowers, however, keeps on increasing steadily.
If interested in learning more about daily personal loans, this information might be of assistance.
The loan barometer survey
Regarding statistical analyzes of personal loans, such statistics were almost non-existent until recently, more precisely until 2015. Lender Zmarta conducted a special survey in 2015 called the loan barometer that focused on mapping which customer groups opt for consumer financing and whether they share certain characteristics. Go here to see how personal loans work.
Moreover, mortgages weren’t included in the survey, and the focus was solely placed on personal loans. According to this survey, Norwegian men and women aged between 35 and 49 account for the largest proportion of new borrowers. This group of customers makes up for 39 percent of all the newly issued credits, 33 percent of which state being parents. These figures were considered surprising, as they are contrary to the impression that young people are the most significant customer group.
In view of gender, men are definitely at the top. Men take out far more personal loans compared to women. The survey indicates that men are responsible for approximately sixty-seven percent of using consumer financing, meaning, on average, they borrow almost a third more than women. There are only speculations about the underlying causes, but one potential cause can be the unequal income ratio between the sexes.
The survey has also shown that residents of Oslo take out the largest number of separate loans compared to the rest of the country. Residents of Møre of Romsdal have the lowest rate of outstanding debt with average debt of 92,000 kroner. In contrast, Rogalendinger residents take the top, with an average debt of 136,000 kroner.
In 2016, most banks decided to take the initiative to make the age group rules stricter when borrowing money without any security. While it was perfectly normal for 18-year-olds to apply for consumer loans at such a young age, most lenders have raised the age limit to 23. There are still some lenders offering personal credits to 20-year-olds, but this number is low.
Nevertheless, these changes weren’t expected to have a drastic effect, as young borrowers only account for a small proportion of the overall customer base. Other statistic data from 2015 indicates that only seven percent of new loans were approved to customers aged from eighteen to twenty-four. This percentage increases in the customer group aged 25 and 34. The lowest share is found in the customer group over 65, as older individuals only account for five percent of the debt.
These figures, however, refer to the percentage of young Norwegians in the overall customer base for consumer financing. Conversely, if young Norwegians are viewed as an individual customer group, the numbers are almost doubled. Surveys indicate that thirteen percent of young Norwegians aged between 18 and 23 owe money in the form of consumer financing.
Unlike young Swedes and Danes, most young Norwegians apply for unsecured loans as well. This data is based on the survey conducted by the Nordea Bank from 2013, which analyses the debt habits of young folks in Scandinavia.
What are consumer loans used for?
Apart from learning about the main groups of customers taking out consumer loans in Norway, it’s time to learn more about the purposes of using such financing. According to Bank Norwegian, which is the most prominent lender in unsecured credits, most loans go to housing. The aim of borrowers is predominantly renovation, especially kitchen and bathroom remodeling.
It’s no wonder many Norwegians take out consumer credits for home renovation, given the high costs of such remodeling. For instance, the price tag for the renovation of damp and moldy rooms can exceed 150,000 kroner, as long as professionals carry out the project. Doing kitchen upgrades tends to be less costly, mainly depending on the type of work to be done. If deciding to buy a new fridge, dishwasher, or stove, the costs will keep on rising.
Due to the high expenses of home renovation projects, it’s completely understandable that these costs are the most common reason for borrowing money. Another reason for seeking such a form of financing is holiday travel. The following informative website, http://www.forbrukslån.no/lån-på-dagen/, provides tips and information about loans and refinancing. Credit cards are usually the preferred method of payment when it comes to holiday habits.
Consumer financing allows borrowers to finance either the entire trip or a portion of the trip at an early stage, as prices tend to be the lowest months before the holiday season begins. It’s worth mentioning that most Norwegian credit cards include travel insurance free of charge. Contrary to getting financing for holiday travel, many Norwegians make such a decision so as to refinance existing debt.
Refinancing of existing debt is actually replacing expensive debt with another loan while aiming for lower interest and better repayment terms. Since unsecured loans are usually delivered with no fixed term, it costs nothing to terminate the official agreement earlier than the term you agreed on with the bank. Anyhow, you should keep in mind that an establishment fee should be included in the assessment, as it’s required for refinancing.
Changes in consumer loan use
Considering the surge in prices in the housing market in Norway, an increasing number of people choose to cover either all or a portion of their equity with an unsecured loan. Nevertheless, as a response to this trend, banks have tried to make their practices stricter. The new debt registers prevent young borrowers from taking up consumer debt to cover the equity requirement when purchasing a home.
The practice of using personal loans to finance equity is considered to be of higher risk than using secured credits. In the former situation, you will have to cope with another loan apart from the mortgage, whose effective interest is higher. As per the survey conducted by the Norwegian Real Estate Association, this practice is still popular in the housing market. One in five real estate agents has had experiences with buyers using consumer loans to cover their equity requirements either partially or entirely.
A repayment plan stands for the number of installments a borrower chooses on the personal loan. Every year is comprised of as many installments as there are months. Consequently, these credits have twelve installments per year. Your repayment plan will be determined based on the sum you intend to borrow and the interest rates you will be offered.
For example, taking a high loan amount means choosing a longer repayment plan to be able to manage the installments. In any event, you have to repay the money within five years. This period may only be extended if you refinance. Then, it could be prolonged to fifteen years. The most important aspect for borrowers to remember is that they choose the repayment schedule themselves.
When filling out the application, you are asked to choose a repayment plan. Hence, you should have an idea of the approximate size of your monthly payments. It’s absolutely important to set up a realistic budget and use it as a starting point for the sum you plan to borrow and the repayment plan you choose.
Borrowers can make changes to their repayment schedules at any time, as these plans are non-binding. Different rules apply depending on whether you shorten or lengthen the term. You can file a request for a longer period of repayment, but the limit is still set so that the sum is repaid within five years. Banks usually charge a fee for prolonging the repayment plan, between 200 and 300 kroner.
Conversely, shortening your repayment schedule is much simpler. All borrowers need to do is contact the bank and ask them to lower the number of installments and adjust the sum to their financial abilities. Also, borrowers have the right to pay extra installments and repay the sum completely before the term ends.
Nowadays, daily consumer loans are available to people older than eighteen.
The opportunities provided by banks are worth exploring!