Last updated January 24. 2018
A loan in Denmark are here used as an umbrella for the borrowing of money without security. And where the loan is not earmarked for a specific purchase. This is why APR becomes a key concept which we will come back to later. This goes for consumer loans, unspecified bank loans in Denmark, overdraft facility, credit card loans and so on. Car loans are also included here because the value of the car, and therefore the security, decreases over time. They are all fast loans or a quick loan.
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Online loan in Denmark – Loan companies in Denmark
The most important figure to keep in mind if you are getting a loan in Denmark is APR. This stands for annual percentage rate. This covers the total annual cost for having obtained the specific online loan with security. This means that the allocation between interest rate and fees is without importance.
APR for fast loans – ÅOP in Danish
APR is a function of the security for the loan and the security for an online loan in Denmark is limited. And because the carried out credit evaluation is limited the APR for these kind of fast loans can be high. As a consequence of the lack of security This is due to the fact that people normally obtaining online an loan in Denmark can be under average payers. And the fast loans are usually on low amounts.
This means that the people who actually complies with the loan conditions are paying for the people not complying with the conditions. So depending on the circumstances, such as being a student or unemployed with a good prospekt of getting a job, it can make sense.
If you buy on credit in a store, APR is once again the most important figure to keep in mind. The interest rates can easily be low or non existing. But if that is outweighed by higher fees or things like that, the low interest rates are offset.
Future impact of fast loans
Should you actually be able to buy on credit without any sort of extra costs, it can easily be a decent solution. But you just need to pay attention to which meaning it will have for your budget to pay the monthly/quarterly repayments. And if the store really is willing to sell on credit without any sorts of extra costs for the customer, they would probably also be willing to give some discount at cash payment.
Are you borrowing 10.000 kroner at 10% interest with repayment after 10 years. And are you only pay interest on the loan until repayment, you will end up paying 10.000 kroner in interest for having borrowed 10.000 kroner.
Overdraft facility and consumer loans in Denmark
An overdraft facility is a standing amount a bank makes available for the borrower without a fixed repayment schedule. A fixed amount is agreed, 10.000 for instance, and of that you can use and repay as you should wish and need.
The APR is higher than for a classic bank loan. But on the other hand you have the flexibility to use and repay the credit as wished and needed. This means that you only have interest costs of the money you actually use. For a standard bank loan you pay for the total borrowed amount disregarding the use. And you have fixed terms for when you have to repay the money.
For an overdraft facility you can also get high interest rate for your own money, as you save interest costs when you put money into the account and thereby draw less on the credit. If you spend more the the agreed amount, you account moves into overdraft. And then you will have to pay even higher APR than agreed at by account conclusion.
Credit card – also a quick loan
Credit card such as Mastercard, American Express and certain store cards for department stores and gas station, are different from a Danish dankort. A dankort is a debit card, by not having the money subtracted from your account at once. But having the consumption for the month added up and drawn simultaneously.
This provides you with at least one month of credit. And can for some people give a better overview of their consumption. Besides that, it increases the possibilities of withdrawing and using money when you are abroad. Here maximum limits on dankort/VISA exists. For other people credit cards can be an unnecessary temptation.
Payday loans – Quick loan
The appearance of payday loans has increased significantly during the last couple of years. And they have in common that approval of the quick loan happens almost immediately. And that the costs are soaring. Be very carefully when on the look for a quick loan.
Car loans in Denmark
For a car loan collateral for the loan exists in the car. But as the car concurrently loses value the collateral for the loan provider naturally becomes worse in time. This is why the interest rate for this kind of loan is higher than for mortgage.
Car leasing is another way that a standard loan to finance a purchase, in this case a car. For traditional car leasing you pay an amount upfront to make a deal. Whereafter you pay a monthly leasing amount. If you like to change car regularly, car leasing can be a good solution. You can at termination of the deal just can redeliver the car to the leasing company and go out and lease another car. You do not have the hassle or risk by having to sell a used car. When leasing a car it is the leasing company who takes care of car repairs. So if you do not want to take on that risk, leasing is a possibility.
Mortgage loans in Denmark
Mortgage or housing loans in Denmark work different then in most other countries. The first 80% of the purchase price can be borrowed via a mortgage loan which is traded directly in the bond market.
This is the main reason for the very cheap mortgage loan possibilities in Denmark. The mortgage institute works as a intermediate between the borrower and the lender, and therefore do not lend out money directly.
The next 15% can be borrowed as a bank loan and the last 5% has to be delivered in cash.
Buying or leasing a car?
Is the option between purchase and leasing a car, the basic parametres you need to assess are the following:
- For how long do you wish to keep the car, and what is the selling price when you want a new car
- Which APR do you have to pay when loaning for a car? Can you borrow through your mortgage because you have equity, you can get a very cheap loan.
- How many and how expensive repairs can you handle when purchasing a car? The risk and the cost are the leasing companys for leasing, but yours when owning.
Hints for fast loans in Denmark
If banks do not wish to lend you money, you really need a valid reason to borrow money elsewhere.
Overdraft facility can be a flexible and cheap alternative to a standard bank loan, but it is of course better only to use money you have already earned.
Leasing should be examined as an alternative to a car purchases and an online loan in Denmark.
Always repay the most expensive quick loan first.