Borrowing money is a pretty big decision if you look at it from an economic perspective. This is normally a rather large expense that one is talking about.
For this reason, it is important to check as much as possible before borrowing any money. Here we give you some tips on things to investigate with the lender you intend to borrow.
Who can borrow?
The first thing to look out for is if you meet the requirements for borrowing money at all from this lender. Common requirements are, for example, that you must be of legal age, written here in Sweden, no payment remarks and have an income. How large this income should be varies depending on how large a loan you wish to take, etc. But it is common for you to have an income between USD 100,000 – 150,000 at the very least to be able to borrow money.
Just remember that there is nothing that says you can safely borrow money just because you meet the basic requirements. The lender does a credit check that must be passed in order to be able to borrow.
How much can be borrowed?
The usual thing about private loans is that you can borrow between 10,000 and 350,000. But not all lenders offer you as a customer to borrow between these amounts. It is often possible to divide the lenders into two different parts and these are the ones that lend smaller amounts which is often up to about USD 25,000 and those that do not lend small amounts but that offer you instead to borrow all the way up to USD 350,000 .
Generally, you can say that those lenders who only have smaller loans are more expensive than those where you can take out the big loans. But just for this, one should not disregard them as it is usually cheaper to lend a small smaller amount to higher interest rates than a larger amount to lower interest rates. It is simply a matter of trying to find the one that is cheapest for the exact amount needed. You should never borrow more than you need.
Maturity – The maturity is also divided by size of the loans. The loan institutions that only deal with smaller loans also have a maturity that is shorter on these. It is often about 1 – 5 years that you can choose from. You can get a longer maturity of up to 12 years if you borrow a larger sum.
Fees and interest rates
So far we have not talked so much about fees and interest rates, but this is obviously a very important thing to check before you borrow any money. It can differ greatly between different lenders and it is unnecessary to pay more than what is really needed.
Amortization – In addition to interest costs, you will of course also have to repay the loan itself. This can be done in slightly different ways so be sure to read what the intended lender has for some rules in this regard. The big question is often if you are constantly paying the same amount every month to the lender to cover the repayment and interest or if you are repaying a certain amount each month and then the interest is added on. How it works with amortization, you can read more about if you visit our department which is about just amortization.
Delay Interest and Delay Fees – Obviously, you have the goal of always repaying your loan as planned. But sometimes unforeseen things can happen and therefore it is good to know what happens to your loan if you do not pay the repayments.
Resolve the loan prematurely – Usually when it comes to the issue of private loans, these can be resolved at any time without any extra costs. Just read for security reasons what rules apply to your loan.