Consumer loans in Finland - 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 of consumer loans has the funds available and borrows 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.
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.
Be over 18 years old. Some banks might have a minimum age requirement of 20 or up to 25 years. This requirement often comes with bigger loans, so there are still plenty of loans available to you even if you are only 18.
Have your place of residence in Finland, and a Finnish personal identification number.
Have a stable, sufficient income source. Banks offer the loans on the basis of getting back the money after the runtime has passed. 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 do not have public payment default entry (maksuhäiriömerkintä)
Here is an overview of the loans offered by online lenders in Finland, which you can also find right here on Moneezy:
Classic loans
Consumer Loans (Kulutusluotto), Quick Loans (Pikalaina), Mini Loan (Minilaina),and Unsecured Personal Loans (Laina ilman vakuuksia) are the four different loans that follow the classic loan structure in Finland. 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.
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 invested 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 (Yhdistelylaina) 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 (Joustoluotto), 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.
Pros and Cons of online 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
Our take on online loans
If you are not realistic and thorough in your planning of budgets 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, 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.
Place close attention to the APR. In Finland, this is measured by the todellinen vuosikorko.
Apply for more than one loan, and stick with the answer you find most convenient.
Be mindful when choosing the amount. If it does not fit well into your budget, you might have trouble keeping up with payments.
It is always important to weigh all you options and compare them to each other so you find the best one for you. Therefore, using an online comparison function is a good idea. Our website Moneezy offers you this. We have made a completely free service 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 Therefore, you can, just like them, relax and sit back and take a look at our pages to get the best overview of the loan type you're interested in, and to make the best choice for yourself! Remember that no one knows your financial needs better than you!
Emil käyttää asiantuntemustaan edistääkseen finanssialaa. Hän on valmistunut Etelä-Tanskan yliopistosta ja työskennellyt General Managerina Intelligent Bankerilla vuodesta 2013. Tänä aikana hän on auttanut yli 500.000 maailmanlaajuista käyttäjää heidän taloudellisten tarpeidensa kanssa.
