People encounter financial emergencies from time to time. These situations can be taken care of by different means; consumer loan is one of those means. A consumer loan is a credit facility given to a borrower for specific projects or expenditure.

This category of credit facility consists of personal loans, auto loans, mortgage, medical and student loans. Although all these fall under the same category, the terms and conditions differ. Generally, every financial institution determines what the terms and conditions are under the ambit of the law and financial regulations

One factor that is a serious point of consideration for many consumers is the interest rate of a loan. Every one that’s looking to take out a loan looks out for the best interest rate. Sadly a good number of applicants do not know how to access forbrukslån med lav rente (consumer loans with low interest). But we will deal with that in this article.

Steps to Accessing Consumer Loans with Low Interest

There is a proliferation of banks and financial institutions that give out all types of loans and they all tout themselves as being the best. They will create media campaigns that draw customers in. But it is the customer’s responsibility to do their due diligence to find out what they can do to get low interest rates and which lender can offer it to them.

Listed and discussed below are some steps to accessing credit options that have low interest rate:-

1. Research as many options as possible
2. Find out the requirements for qualification
3. Compare all options with the same parameter
4. Use a loan agent
5. Use a co-applicant

Research

Before you set out on the journey of applying for a consumer loan, it is necessary to carry out thorough research. Scrutinise as many lenders as possible and as many offers as possible. If before now you were financially ignorant, you cannot afford to remain so.

You need to study and understand different financial terms and the legalities that accompany credit facilities. There are many materials that you can assess online (such as this article) that will contribute to your knowledge base and help you make the right decision.

Find Out Requirements for Qualification

This is one of the things you will do in your research stage. Ensure that you find out the requirements for the specific type of loan that you want and also how to get low interest rate. In order to help you with this, below are the basic requirements across board:-

1. Age
2. Annual income
3. Employment history
4. Credit rating
5. Debt to income ratio
6. Financial history

Age

Like we all know, the generally accepted legal age is 18 years. But each lender reserves the right to peg their age limit.  So do not be surprised if you see a bank or lender that pegs their limit at 25 years. That’s actually the highest age limit we have seen from any lender. So do not take this for granted; ensure that you know the age limit that has been set by your preferred lender.

If you are below the age limit set by your preferred bank, you can apply with a co-applicant that meets the age requirement. Bear in mind however, that this depends on whether the bank allows it or not. If you are a student looking to get a loan, you can check out this site: https://www.theclassroom.com/

Annual Income

Every lender will surely ask for proof of your annual income. They can do this either by requesting you pay slips for the past 3 months or more or query your bank statement.

There are government regulations as to how much as person can borrow based on their annual income. For example, if you want to take out a small or micro loan, it cannot be more than 5 times your annual income. Any lender that approves a sum that is over 5 times your annual income has broken the law.

Every type of consumer loan has its limit as it concerns the borrower’s annual income. It is therefore important that you find out the amount your annual income qualifies for before you start the application process.

Employment History

Every bank or lending institution looks out for the employment history of would be borrowers. The preferred candidate is one who has held down a job for a long time. Staying in a job for a long time is an indication of stability to the lender. This also shows that you have the capacity to stay the course of repayment for whatever loan they give you.

Credit Rating

We do not want to assume that everyone knows that credit rating is one factor that greatly affects the interest rate that a borrower gets. So we strongly iterate that your credit score determines the interest rate you will get.

In Norway, people with scores above 70 are considered low risk borrowers and they get loans with the lowest interest and best terms.  Those who are between the 20 and 50 score points are considered high risk so they get higher interest rates.  But people whose score fall below 20 should expect their application to be rejected.

Debt to Income Ratio

This is the summation of a borrower’s total debt over their annual income. So in Norway this is pegged at 500% which means that a person’s total debt cannot be more than 5 times their annual income. So if you already have debt that is about 5 times your annual income, do not bother to apply for another loan.

Financial History

This will show all the records of the loans you collected and how you repaid them.it will also include your income and cash flow and also show your DTI. It is therefore important the even before you will need a loan, you manage your financial affairs with integrity and transparency.

Use a Loan Agent

The stress of researching multiple lenders and trying to understand all the terms and conditions can indeed be too much. But you really do not need to go through the process on your own. You can contract the service of a loan agent.

These professionals work with many banks and financial institutions and already know the ins and outs of consumer loans and the banking system. Looking out for and engaging the service of a reputable loan agent can go a long way in cutting down time and money spent.

Use a Co-signer

Also referred to as a co-applicant, a co-signer is a person that teams up with another to apply for a loan. Usually, an applicant who is either underage or has low credit score or other issues on their credit report will look out for someone whose rating is ok and who meets all the requirements and get them to co-sign the application. The co-signer is usually a parent, business partner or spouse.

There are some benefits to be gotten from using a co-signer for your loan; click here to find out.

Quick Tips before You Start Applying for a Consumer Loan

1. Pay Off Some Debts – if you have multiple debts and you want to take out a new loan, endeavour to pay off some of the debts. When you do this, you increase your chances of getting lower interest rates.
2. Refresh Your Search Before Applying – Let’s assume that you carried out a search in the month of January, documented your results but didn’t apply. It’s now March and you are ready to start the application process. You are advised to refresh your search to be sure that some terms and conditions have not changed. Similarly, some lenders might be offering lower interest rates. So ensure that you keep abreast of current rates, terms and conditions.
3. Monitor Your Credit Score – If you have made efforts to pay off some of your debts, there is the possibility that your credit score has increased. Make sure you monitor your rating per time so that are sure of the type of interest rate you qualify for.

Conclusion

The desire of every borrower is to get the best deal which includes low interest rate. In this article, we have provided you with a guide on what to do and how to go about it. Bear these tips and info in mind so that you can make an informed decision.