People work hard to earn money. Everyone wants to make full use of it and save on interest while borrowing loans. Very few people can afford to live without EMIs. And that is because everyone should save a part of their income.
And it is generally not advisable to spend your savings on your daily expenses. It is where consumer loans come into play. You do not have to think twice to buy consumables with these easy loans available with affordable interest rates.
Many banks in Norway disburse consumer loans within 24-hours to 3 days. It is important to avoid paying high-interest rates, whether using them for one-time financing or refinancing.
People who have expenses split over multiple credit cards and other unsecured borrowings have difficulty managing them. By refinancing, they can combine everything and look for a cheaper loan alternative.
It also avoids annual maintenance charges on accounts and credit cards. In other cases, you can use on-the-day loans to clear the old debt, in which case, there will be no transfer of money in your account. Bank will check with your creditor and transfer the money directly into that account.
Despite being quicker in disbursal and easy borrowing, these quick borrowings come with their own set of downsides. Let us discuss in detail the benefits and dis-benefits.
Benefits of on-the-day Loans
Convenience- The amount gets credited to the borrower’s account within few clicks. You can borrow them sitting at your home or office or from anywhere when in a crisis.
Less Documentation- There is no excessive documentation required for such borrowings. You would just give your address and social security number or D Number along with proof of your source of income.
You might have to give up to a 3-month salary slip or the last 3-year accounting and business statement if you are self-employed, along with the previous tax returns filed. Along with these, you will give your account number, your email address, and your mobile number.
Banks collect all the other related important information from the National Population Register when the applicant applies online. These typically include tax information, payment history, and credit rating. They also collect information on debt with a mortgage and any unsecured debt from the Debt Register. Banks then send you a loan agreement that you will sign with your Bank ID.
Flexible Reasons- There is no requirement to mention any specific reason while availing of these short-term loans. Accordingly, you can use a part of this money for any other purpose as and when required. Even though the bank might ask you to mention the reason, that is only to ensure you are not using the money for anything illegal. It doesn’t matter if you do not use that money for the same purpose.
Flexible Tenure- You can borrow on-the-day loans with different tenure options, usually up to 5 years. Also, the amount of loan that you wish to borrow is flexible, depending on your eligibility. Usually, the tenure options are restricted, mainly when the borrowing amount is too low, say NOK 5000. Know more about why people rely on such loans here.
Quick Process- The procedure gets completed, and the loan gets approved within 24-hours, and the amount gets credited into the user’s account, unlike traditional ones that took from a few days to weeks for disbursal. With high-end software, it is effortless to do the credit assessment of the borrowers. However, with larger amounts, the banks might take an extended amount of time to evaluate the borrower’s eligibility.
Physical Visit Not Required- The best part about these loans is you do not have to visit a bank physically to avail them.
Interest Rates- The interest rates offered on on-the-day loans vary. There are no special interest rates for senior citizens. You can also compare interest rates at sites such as forbrukslån.no/lån-på-dagen/ to get the best offer on your unsecured loan. With larger consumer loans, you might have to pay anywhere between 8-18% based on the loan amount.
Disadvantages of On-The-Day Loans
No Lending to Unorganized Sector- If you are working in an organized sector and do not have any income documents to show, you cannot avail of any on-the-day borrowings for any amount. It is true even if you earn more than their minimum requirement set by the banks to disburse that loan.
High-Interest Rate on Micro-loans- Usually, with amounts less than NOK 30,000, you need to pay a high-interest rate of around 60%. It is not practical to pay if you can borrow easily from friends or family who have buffer funds.
Increased Disbursal time- If you have put in your application for an on-the-day loan on a Friday afternoon, you might not have the money in your account by next Monday. So, you need to be prepared for an alternative in case of emergencies. Again, on holidays, Bank can further delay the disbursal time on the loan.
Absence of Bank ID- If you do not have a Bank ID, you might have difficulty availing of an on-the-day loan. You need to request the bank you usually deal with for the Bank ID to continue with the process. In which case, you need to physically sign the loan agreement, meaning your procedure will be delayed.
Age Requirements- For borrowing these on-the-day loans, the minimum age requirements vary within banks. In any bank, you need to be a minimum of 18 years of age to apply. With some banks, this limit can be up to 23.
Income Limit- There is a minimum limit of income for which you must have relevant documents to show before requesting an on-the-day-loan. This limit usually is NOK 120,000 a year. But in case you are applying the loan for a much more significant amount, approximately more than five times your income, there are lending regulations that stop them to service your request.
You might need to add a co-borrower if the loan amount is higher than your income. You would need all the documents like identity proof, social security number, income and tax proof, payment history, credit rating for your co-borrower.
Lending to Foreigners- You need to have a minimum of 3-year income and tax proof of living in Norway if you are a foreigner and wish to borrow from a Norway Bank.
You should do thorough research on the lending options and the related interest rates offered by the different banks before shortlisting one. You can also take the help of lending agents who can compare the rates for you and give you the best deal.
You also need to make sure of the worst-case situation concerning your earnings. It is always recommended not to borrow larger amounts of loan that might get difficult to repay.