There can be many reasons why you need to take out a loan. You may want to buy a home and need a mortgage or buy a car or boat. You may also simply need money to cover an unexpected expense, such as a new refrigerator, a dentist visit, or a car repair. You can, of course, cover such expenses with an alternative to SMS loans during the day, ie a loan of far smaller size than for housing, car or boat.
Loans without collateral
Alternatives to SMS loans are what are called consumer loans, ie loans without collateral. This means that the bank that lends you the money does not take any security for the loan amount. In the case of a mortgage, the bank will take collateral in the home you buy for the loan amount. So it doesn’t happen here. Therefore, the interest rates on a secured loan are also significantly higher than for a secured loan. A consumer loan can be a few thousand dollars. The highest loan amount in this category of loans is $ 500,000.
Alternatives to SMS loans are smaller consumer loans, also known as small loans. This is an amount up to $ 70,000. The repayment period for such loans is a maximum of 5 years, but the lowest amounts have a repayment period of only a few months.
SMS loans as such do not exist in Norway. This is simply because it is not allowed to enter into a loan agreement via SMS. At least that’s how the rules are today. SMS loans, on the other hand, are very popular in our neighboring Sweden, as this is an easy way to apply for a small loan amount. However, in Norway there are many alternatives to SMS loans, ie micro loans or small loans which are other names of consumer loans or loans without collateral if you wish.
Effective and nominal interest rate
When looking for an alternative to SMS loans, it is important to take a look at the interest rates. The interest rates are what the bank pays to lend you money. The interest rate itself is the one called nominal interest rate. This is the basic interest rate itself, and it is calculated using a special formula. The interest rate should cover not only the risk, but also the inflation and the fact that the lender gives up the opportunity to use the borrowed funds for something else.
The effective interest rate is composed of the nominal interest rate and the fees charged by each bank in connection with the loan. For those who are considering an alternative to SMS loans, this means that the effective interest rate will show you what your loan will actually cost during the loan period. It is therefore worthwhile taking a good look at this figure before deciding where to take out a loan.
The fees included
There are often two different fees that come with alternatives to SMS loans. This is first and foremost what is called the establishment fee, and then comes the termination fee. The first is an amount you pay only once, and it happens when the bank creates the loan in your name. This amount is usually somewhere between $ 300 and 1500, but some lenders take it as a certain percentage of the loan amount. That is, the more you borrow, the greater the setup fee. There are also some banks that advertise that they do not charge such a fee.
This is not a one-time fee, but a fee to be paid at each installment while paying your installment. The size of the term fee varies, but uses to be somewhere between $ 30 and $ 60.
These two fees are therefore added to the nominal interest rate, and are then given the name effective interest rate.
Some good advice for those who are taking out SMS loans
If you are planning on the loan market, you want to create a budget so that you can see how much you can afford to pay off monthly. Then you can use a loan calculator to see how high a loan you can take.
Since loans are expensive, it pays to check around and find the cheapest consumer loan for you. You do this easily by using a comparison service that quickly and easily shows you which banks offer the cheapest loans right here and now. Then you can apply directly, compare the offers you get and choose it with the lowest effective interest rate.
Once you have found the loan you want to accept, sign with your personal BankID. This is a quick and easy way to make sure no one takes out loans in your name. The money will be paid into your account and as soon as they arrive you can use your SMS loan alternative to whatever you want. No one is asking you what you actually intend to spend your money on.