From 2008 to 2018, consumer loans in Norway grew each year; however, the annual rise differed. The most significant annual change happened in 2016 when it climbed by 15.3 percent over the previous year. The growth the next year was less, with consumer credit increasing by just 2.5%. It rises in Norway each year, and there are many reasons behind it. There are firms in Norway like Lånepenger.no/smalan from where you can borrow money at the best interest rate. So, there are many reasons why the consumer loan is rising in Norway, and many people still question that this bubble will burst or not. You can get information about such consumer loans in Norway in this blog. So, let’s start:
A consumer loan is a loan in which the person takes a lot of money at once for the biggest expenses. The types of this loan are unsecured and secured. In the secure one, the person who is taking the loan gives something he/she owns as security. When he is not able to pay the loan at the fixed time, the thing he gives as security is owned by the firm from which he takes the loan. While in an unsecured one, the company doesn’t take anything security. Also, in an unsecured consumer loan, you can just get a limited amount of money.
Why are consumer loans rising in Norway?
Following are the reasons which increase the consumer loans rate:
The requirement of purchasing a house:
People avoid taking houses on rent because they think that rent which they are paying every month will not give them any benefit in the future. So, they planned to take a lot of money at once as a loan, and then rather than paying for the rent of the house, they can pay for the loan installment, and after completing the loan, they’ll own the house.
To invest in business:
Some people also take the loan to invest it in their business. People are searching for new methods and ways to make more money, and starting a business is one of them. It is another reason why consumer loans are increasing in Norway.
Purchasing a car:
The need to own a car has also become the reason for many people to take a consumer loan.
In starting, you may just see the benefits of taking a loan but don’t forget that you may end up facing some drawbacks after taking the consumer loan. If you don’t know much about it, you can read these drawbacks below:
People have to sell their property for paying this loan:
In many cases, it becomes tough for the people of Norway to pay the consumer loans. They are rising with every passing year, and people with small salaries face a lot of problems in paying this loan. The ones who can’t manage to pay this loan end up selling their property to pay this loan. Even some people sell their only house to pay their consumer loan. This is the first drawback of increased consumer loans in Norway.
Disturb their budget:
In Norway, only the people who have an excellent business can pay this loan without any problem. The ones who are doing small jobs often end up disturbing their whole monthly budget after paying for this loan. This is another drawback that the people of Norway are facing. So, loans usually disturb the budget of people and make their life difficult.
Will this bubble burst?
There is a chance that the rate of consumer loans will decrease in Norway because they put some restrictions on this loan. Also, now they don’t accept all the loan applications.
Rejection of applications:
According to the latest information, every 2 out of 3 applications for consumer loans are rejected in Norway. It can reduce the rate of increasing consumer loans there. They increase the requirements of taking the loan, which allows them to decrease the loan rate. If you are planning to take a consumer loan in Norway, you should know these requirements. If you don’t know, then maybe you don’t get the loan as well.
What are the requirements of taking a consumer loan in Norway?
Below are the requirements for taking a consumer loan in Norway.
You should have full employment:
If you do a part-time job, you can’t take a loan in Norway. Only the people with full employment can take this loan, and it limits the selection of people who are approved for the loan. If they allow people with part-time jobs too to take the loan, in the future, there is a risk of not getting all their installments. And it will be a drawback for the firm if the loan taken by the person will be an unsecured consumer loan.
Only citizens can take the loan:
You can’t take a loan in Norway if you are not a citizen there. Many people who come from other counties can’t take a loan even if they apply for it. The company will reject their application and don’t allow them.
The ones who have a residence in Norway can take the loan:
The ones who don’t have the fixed residences in Norway can’t take the consumer loans. It doesn’t matter how genuine your reason is; you should have a fixed residence in Norway for getting approval for the consumer loan.
How will these restrictions help?
These restrictions will help in reducing the consumer loans rate by not allowing everyone to take the loan. Such restrictions are also beneficial for the firm which is giving the loan by making sure that the person taking the loan will not go anywhere until he/she pays the loan.
Consumer loans are increasing in Norway, and many people are wondering that whether they keep growing or will this bubble burst soon. This post is all about the information on consumer loans in Norway, and that’s why you should read it. Whether it’s about the consumer loans restrictions or anything else about it, you can read the detail here.