I intend to continue our new series where we correct misconceptions about various things in finance, loans, insurance and the like. We explain how it really is so you know what applies. This week, I thought I’d take up a few more ideas about loans and go through inaccuracies and what is actually true.
You cannot borrow if you have payment notes
A payment note can put it in several ways. It is an indication that something is not right in your finances and that you have had trouble paying a debt at some point in recent years. Therefore, it can be tricky to take out a loan, get a subscription for eg a mobile phone, rent an apartment or buy on a down payment.
As a rule, many lenders do not allow you to have any payment notes in order for your application to be approved. They take a credit report and get straight up if there are any remarks. Most large banks usually have the rule that you may not have any payment notes and many other lenders have the same rule, but not everyone has such hard rules.
There are a number of lenders that actually offer loans to people with payment notes. The basic idea is not to automatically deny people just because they have a note but instead to do a proper control of the economy and see if there is room for a loan. A payment note does not necessarily mean that you have bad finances. It remains for a full three years for private individuals and you may well have arranged the economy since way back.
For private loans, it is more uncommon for lenders to accept payment remarks, but some lenders do. There is a greater chance of lower amounts, for example up to SEK 30,000. When it comes to, for example, SMS loans, there are a number of lenders who do not have this requirement. For mortgage loans, there are also some lenders who target you who have difficulty getting a loan. Usually, there is a slightly higher interest rate on such lenders as the risk is considered higher.
- Read more about loans with payment note and find lenders.
- Check out our comparison of micro loans / SMS loans with payment note.
It is not possible / cost money to settle a loan early
Sometimes you might want to settle a loan before the maturity has expired. If you are one of those who think it is complicated or cost extra to settle a loan in advance, I can tell you that it almost always goes well. In principle, it is never bad to repay a loan early because it just means you don’t have to pay unnecessary interest.
For private loans, you are always free to repay extra at any time during the term of the loan. You can therefore pay a little extra or pay off the entire loan at any time in advance. It does not cost you anything to do so and it is always allowed. If you would get enough money to repay the entire loan, it is often a good idea since you will not have to pay interest for the rest of the term.
When it comes to micro loans and SMS loans, this is the same principle since such loans are basically only small private loans. Usually, the repayment period of these loans is so short that it is usually a bit difficult to pay back even earlier, but there is nothing to stop you from doing so. Paying back earlier can save you some money in interest.
For mortgage loans, special rules sometimes apply
Unfortunately, for home loans, it’s not always that easy. If you have chosen a variable interest rate, you can pay back in advance if you wish. The variable interest rate is actually interest that is fixed for three months and after these three months you can if you want to pay off extra and make your loan as needed.
It is when you have a fixed interest rate on your loan it becomes a little complicated. When you take out a loan, the bank also borrows money to be able to lend to you. They borrow this money at a certain interest rate that is unlocked over the time of your loan. If you want to settle the loan prematurely, you have to pay a so-called interest payment, which is a compensation for the bank’s “costs”. This is in principle compensation for the bank’s unlocked money. The calculation of the interest rate differential is a bit complicated, so the best thing is to contact the lender and ask them to calculate it for you.