(Last Updated On: April 28, 2023)

Consumer loans are credit facilities that banks or financial institutions extend to their customers. The funds disbursed through this process can be used for any expenditure; the borrower is under no obligation to use it for a particular purpose. 

Most often, banks require that applicants fill out what they need the money for. However, as we mentioned, the applicant can fill in one purpose and use the money for another purpose. This flexibility is one advantage of consumer loans. 

Although these loans are easily available, there are factors that may make them less desirable and beneficial than they should be. One major factor is the interest rate at which these loans are given. Another factor is that of putting down collateral for substantial sums. In this article, we will look at forbrukslån lav rente (low interest consumer loan) and how to get them without security. 

Types of Consumer Loans

There are different types of consumer loans and they include:-

1. Mortgage 
2. Auto 
3. Medical
4. Student 
5. Personal
6. Credit card

These loans can either be secured or unsecured. 

Secured Loans 

Secured loans are those that are backed by collateral. This is a situation where the borrower puts down an asset of equal or more value than the amount applied for. This asset serves as security for the funds disbursed and in the event that the borrower defaults, the collateral will be used to recover the loan.

Mortgage and auto credit facilities are secured and most often the property bought is the collateral. So in the case of a mortgage, the house or property bought is the collateral while for auto, the car or vehicle bought is the collateral. In the event that the borrower defaults, the house/property or the vehicle is repossessed to offset the debt. 

Unsecured Loans 

 These are credit facilities that are granted without collateral which means that the borrower does not need to put down any asset before the loan is approved.  Credit facilities in this category include personal and student loans. 

The main thing to note about unsecured loans is that the amount that one can get is usually limited. This means that the amount you can be approved for will not be up to the amount you can get with a secured loan. 

How to Get Low Interest Consumer Loan without Security

Getting consumer loans of substantial amounts is usually easier with collateral. However, one can still solve a lot of financial issues with loans without collateral, but the issue is getting one with low interest rate. Visit this site for tips on how to leverage collateral to get substantial funding: https://www.forbes.com/

Below are some tips to help you get low interest consumer loans without security:

Ensure that Your Credit Score Is Good 

Before you embark on the journey of getting a loan, you need to check your credit score. This is because that is one of the things that any lender will check first. 

Ensure that the score is good so that you can have the bargaining power to negotiate for low interest rate and other terms and conditions that will be favourable to you. 

If your credit score is not as it should be, you need to improve it before putting in an application. You can improve your credit score by paying off smaller debts. There are also specialized financial products for improving your credit score. 

Consider Applying With a Co-signer 

In the event that you cannot secure the facility that’s designed to help you build or improve your credit score, or you are unable to pay off smaller loans, you can consider applying with a co-signer. Applying with a co-signer means that a borrower will present their documents together with that of another person. 

This person should be one whose credit score is high. This will help balance out the requirement of the lender. Bear in mind that the co-signer is jointly responsible for repaying the debt which means that the joint application has to be with a trusted partner. This co-signer can either be a parent, spouse or business partner.  

Ensure that You Do Not Have Multiple Loans

You will be at a financial disadvantage if you have multiple loans and even instalment payment agreements. This is because you have to pay fees and additional interests on every debt that you have and this will impact on your financial history. 

If you have multiple loans, endeavour to pay off the most expensive ones first or seek refinancing. In fact with refinancing, you can get lower interest rates because you consolidate all your debts into one.

Check the Interest Rate Environment Regularly

Even if you have already taken out a consumer loan, you can still get a facility with lower interest rate. What you need to do is to regularly check as many options of credit that is available and the interest rate that they come with. 

Moreover, the interest rate climate may have changed in favour of consumers. Additionally, your credit score may have improved from the last time that you took out the loan which will qualify you for low interest consumer loan. Read this article for more information on interest rate environment. 

For those who are seeking fresh credit, checking out multiple options is imperative so that they can identify the lowest interest rate available. 

Check Out and Get as Many Offers as Possible

One important thing you must do as you look for low interest credit facility is to check out as many offers as possible.  This helps you to have many options to compare and increases your chance of getting approval for the lowest deal possible. 

You can either apply to as many lenders as possible by yourself or go through a loan agent.  Going the loan agent route is actually less stressful and will save you time. All you need to do is fill out a single form which will be submitted to multiple lenders. 

These lenders will review your applications simultaneously and you will get a response within 2 days. You can then look at the loan offers that come in with the loan agent and sift out the best one with the lowest rate for you. 

Bear in mind that it cost you nothing to use a loan agent. Rather you stand to benefit from their services at no cost. The major benefits you get are exposure to many options and expert financial advice. 

Factors That Can Affect Your Loan Application

Before we round up this piece, let us briefly share some factors that can affect approval of your application for credit facility. These factors include the following:-

1. Age – Most lenders are more likely to consider 21 – 55 years for employees and 25-60 for self-employed folks. 
2. Debt to Income Ratio – This is expected to be low which means that your monthly expenditure including debts must be lower than your monthly income. 
3. Credit score – A borrower with a low credit score doesn’t stand a good chance of getting approved for a loan. 
4. Unemployment – Most lenders would always check the employment status of an applicant. Rarely will you find a lender that will approve loan for an unemployed person and if you do, their interest rates are usually astronomical.  

Conclusion

Consumer loans have come to stay in modern day society. We have discussed the various types of loans with a concentration on how to get low interest consumer loans without security. We believe the information shared here will help you get the best deal when looking for credit facility.