How to pay back a loan

There can be many reasons why one chooses to take out a loan, but one thing that never changes is that the loan must be repaid. Many people experience problems with the repayment, which is unfortunate as it often means extra interest and fees.

Fortunately, it doesn’t have to be difficult to repay a loan, so we’ve put together some good advice to help you make the repayment period easier.

Choose a lower repayment amount

money cash

When you take out the loan, you are often given the opportunity to choose how much you want to pay off per month. Many are tempted to opt for a high repayment amount, so that less interest will come on the loan, but that is not necessarily a good idea.

If it is a larger loan, then it is likely that there will be unforeseen expenses during the repayment period. Here it is important that you can afford to pay for such expenses in addition to your installment amount. Therefore, it is rarely a good idea to choose the highest possible repayment amount, as you are in fact at risk of either falling behind on the installment or, at worst, having to take out another loan.

Consider carefully how large a repayment amount you choose. You may be able to save on interest if you pay off quickly, but the savings are so great that it’s worth the risk.

Schedule your installments and set a budget

money cash

Once you have taken out the loan, you also know when you will have to pay it off. Schedule your installments so you know exactly when they are and how many months to spend.

It can be a huge help if you put in a monthly budget to see how much you have left over after you pay off your installment. Keep in mind that you should give high priority to debt – for example, it comes before all the pleasure.

A budget helps you create an overview, which in itself can be a huge help when it comes to repaying a larger or smaller debt. Many loans become really expensive at first, if you cannot pay the installments.

Remember the special events

money loan

The months when there are special events are most often where it is difficult to get the debt repaid. Fortunately, this is something that you can anticipate and therefore handle.

If you pay off a debt, your finances are likely to be a little tighter than usual. This may prove to be a problem in connection with special events – for example, the Christmas month or the months when one of the children has a birthday. Even a high-income economy can take off these months, so it’s important that you pay extra attention.

Fortunately, it is possible to foresee the months when there are extra expenses due to events. Here it is important that you compensate by saving extra in the previous months. This is also one of the reasons why setting a budget when paying off a loan is so important.

If it is not possible for you to save as much as you want, then it may be necessary to prioritize. For example, it does not have to be the size of the gift, which determines the quality of a Christmas Eve. Also, you can also easily have a birthday party, where the menu is modest, but cozy.

There is no shame in having a tight economy, while it is never a good idea to live above capacity because you want to maintain the façade.

Contact the lender if there are any problems

money cash

Even the world’s scheduling may not always save you, and you may end up in a situation where your current repayment plan turns out to be unrealistic. For example, you may lose your job without notice, which means that your financial situation has changed completely.

If you are in a situation where you can no longer repay as planned, then it is extremely important that you contact your lender. Your lender is interested in getting their money back, but you also have experience that the probability is greatest if they cooperate with the borrower. In the vast majority of situations, you will find that the lender understands how to restructure the loan so that the repayments are reduced.

When borrowing money, it is important that you do not consider the lender an enemy. They are often far more cooperative than you immediately think.

Ask for help

money cash

If you are not a shark for personal finance, then it might be a good idea to ask for help from someone who is. If you have got your loan from the bank, you can often ask them for help in setting a budget that you can comply with and otherwise manage your finances.

It is also possible that you know a friend or family member who is good at setting budgets. Here it is also possible to ask for help if you are more comfortable with this. A good budget can be a great way to reduce stress and get more out of your money.

Enjoy when the loan is repaid

 Enjoy when the loan is repaid

While it is not fun having to pay off a loan, it is a nice feeling when the whole loan is repaid. Be sure to enjoy this feeling.

In the end, it doesn’t matter if you spend a few months on or off to repay a loan. The most important thing is that you do not stress yourself or your finances too much while paying off the loan. Keep in mind that fortunately there are other and more important things in life than loans.
However, the best advice is that you should always consider it carefully before taking out a loan to start with.

Student loans or not?

Life as a student is not always a dance on roses, and it is especially difficult for the economy to get the hang of it for most people. We are fortunate to live in a privileged country where you have the opportunity to receive support during your education, but surviving on SU alone can be difficult.

It is especially students in Denmark’s most popular study cities who may run into problems with the economy. This is mainly because the rent in these cities is so high that a large proportion of the monthly rent. Here, it can be completely impossible to survive on SU alone.

Not everyone can get help at home

money cash with couples

Some students are so lucky that they can get help from home. For example, more and more parents are choosing to invest in an apartment for their children, which they can live in while they are studying, while others choose to provide some financial assistance along the way.

However, it is far from all parents helping their students along the way. For some, this is a matter of principle, since the young people must learn to stand on their own, but for others it is simply because there is no advice. In any case, it can be extremely difficult for these young people to get their finances connected.

The opportunity for leisure jobs

 The opportunity for leisure jobs

Many young people choose to get a leisure job which can dilute the economy while they are in education. This can be a good way to avoid student loans if you have the energy to care for study and jobs all at once. Some students are also so lucky that they can get a job that is relevant to their studies, but this is often a small number.

In some studies, their emphasis is on study-relevant work, which often means volunteering or unpaid internships. For many, this may make it impossible to have a paid job as well. Others just want to focus 100% on their study so that they can achieve the best possible results and therefore they opt out of work.

In some of Denmark’s largest study cities, it is a well-known problem that there are not enough student jobs compared to the number of students in the city. This is because universities attract so many young people that there is huge demand for jobs. In practice, this means that students cannot find a job even if they wish.

What does a student loan cost?

money loan

Unlike most other loans, setting up a student loan costs nothing. With other types of loans, it is common to pay a setup fee, but this is not the case with a student loan. You can borrow around DKK 3,000 a month and the interest rate is 4% while you are still reading.

When you finish the study, the loan must be repaid. Here, the interest rate drops to 1%, which is an extremely low one. Generally, there are no other loans that can match that interest rate. However, it is important to note that interest rates rise to 8% if you do not comply with your repayment agreements.

How much to pay off each month depends on the size of the debt. It is also the size of the debt that decides whether to repay the loan for 7.5 or 15 years.

Is student loan a good idea?

money cash

Initially, it is rarely a good idea to take out debt, but experts do point out that in many cases a student loan can pay off due to the low interest rate. As mentioned earlier, a cheaper loan is not found in the market, and thus it can be an advantage to take advantage of the loan option.

If you are a student and are considering a student loan, then you should note that you can borrow up to approx. DKK 3,000 every month where you are active in study. However, there may be talk of it being possible and borrowing extra if, for example, you are a provider or similar. However, here it is also important to note that there are no loans. For example, you can easily borrow less if you can live for less. If you borrow thousands every month for all the years you study, it can easily run into a lot of money. This can feel like a hindrance on the day you get your first job.

Pay back your student loan

money cash

You start repaying your student loan when you finish your study. You will automatically receive a letter from the SU Board when it is time, and here you will also have the opportunity to view your entire repayment schedule. Often, you only have to pay off with a small amount, which also means that it can easily be a long repayment period.

In relation to a student loan, however, it is important to note that it is also permissible for you to make voluntary payments. You can do this at any time and it’s free. Many people choose to take advantage of this opportunity so that they can get rid of their debt faster and pay less in interest. A small extra repayment on the loan can be one and investment if you have money to spare.

Do I have to pay off extra on my loan?

 Do I have to pay off extra on my loan?

As mentioned earlier, you have the opportunity to voluntarily deposit extra money to pay off your student debt, which can be a huge benefit if you want to be debt free quickly. However, it is important to mention that it is by no means always a good business.

You may not pay off extra on your student loan if you have debt elsewhere. This is because the student loan has the lowest interest rate, so getting this loan out of the world should not be your first priority. If you have other debt, this debt should be your first priority – especially if it is repayment loans, or other types of expensive loans. Only when these loans are gone should you consider giving extra attention to your student loan.

Fortunately, student loans are generally so cheap that interest expenses are marginal as long as you comply with your repayment scheme.

Tips for small consumer loans

Small consumer loans are becoming more widespread in the Danish population, and it is not difficult to understand why. The average Dane lives a very changeable lifestyle, and that is not always related to the fact that wages come only once a month. That is why more and more Danes have started to make their finances more flexible through small consumer loans. It’s an easy way to adjust your finances to fit your needs. However, there are some things that you should pay attention to depending on where you borrow your money.

Basically, you pay interest and fees when you take out a loan. On the other hand, you get access to the punter when it suits you, and as a starting point you can spend the money without interference from the borrower. This makes small consumer loans a popular choice in many Danish homes.

Possibility of installment scheme

money cash

For example, if you have to buy a piece of electronics or similar, it might be worthwhile to check if the dealer has a repayment scheme. What you will experience exists in many places, and you may even be lucky that the first time is interest-free.

However, you should not always choose a repayment scheme with the dealer. It is always a good idea to explore more options, as many dealers can be expensive and have high interest rates. This can vary immensely from dealers to dealers, and you should pay particular attention to the interest rates of the dealers who are known to sell things on installments.

If you buy a piece of electronics on installment then it is never a good idea to buy new one until the old piece of electronics is completely paid off. Otherwise, you may end up with many concurrent loans, which are unnecessarily expensive. The price you can get for a piece of used electronics rarely matches the residual debt you have.

Loans from friends and family

money savings

If you just need a smaller consumer loan, it can also be tempting to contact friends and family. It is often possible to borrow smaller amounts here, and it is also rare that there is interest on the loan, which is another advantage.

Friends and family can be a great source of help in an emergency where money is urgently needed for daily living. Here you can be lucky enough to have a supportive hinterland ready to help when in need. However, it is less certain whether it is a good idea to borrow from them for consumption, which is more enjoyable.

When you borrow for pleasure, you increase the risk that over time a conflict of money can arise. If you borrow from someone you know, they are likely to see you spend the money. Therefore, if you have borrowed money from them, it is also impossible that they would like to interfere in what you spend the money on. For example, if you spend the money on a new phone, you may find that it creates discord because they feel it was unnecessary.

In any case, one must think carefully before borrowing from friends and family. If it is a small amount, it is far better if you can get the money done, in return you owe them a favor. It creates less division in the long run.

The bank

money cash

The bank can also help you if you need to borrow a small amount. In many cases this can be solved by allowing you to make a minor overdraft on one of your accounts. Alternatively, it is also possible that your finances are so good that you can get a standing cash credit with the bank. If you get a cash credit, you get a lump sum that you always have the opportunity to borrow from the bank without contacting them first.

If you get a bank loan with the bank, you should be aware that the interest rate on a bank loan is usually higher than with a similar loan. This is because the bank does not interfere in what you spend the money on, and thus they have no control either. In practice, this gives the bank a higher risk and therefore the interest rate is also slightly higher. Still, it is important to mention that in many cases it can still be a cheap solution.

Many experience bank refusal because their finances have been unstable. For others, waiting for as long as it takes to process a bank loan case is not an option. It is especially at very small amounts that it is impractical to borrow from the bank.

payday loans

money cash

If you have opted out of the bank as a loan option for a small amount, you still have the option of quick loans. Mortgages are an easy and flexible way to borrow money. You typically have to apply for the loan online, and there are many different agencies offering mortgage loans. Interest rates can fluctuate a lot, so it’s a good idea to do some research before you borrow. When applying, it will be assessed whether you can be approved for the loan. This typically goes really fast with quick loans, so many people experience receiving the loan on the same days. There are rarely questions about what the money should be spent on, so that is your case.

A repayment loan usually has to be repaid within 30 days, but there are many options on the market. It also means that you can easily find a loan with a longer maturity if you need it. The most important thing when dealing with quick loans is that you thoroughly research your options so that you can make an informed decision about your loan. You pay something extra in interest, but in return it is also incredibly easy and fast. In other words, there are both pros and cons that you should consider.