The credit and loan market in Denmark offers standard products, which are not tailored to meet the individual needs of customers. Nonetheless, if you are looking for loans in Denmark, you will be able to choose from a variety of standard loan products, allowing you to choose just the loan that you require.
Standard loan products are more affordable than tailored solutions. As a result, it spurs competition among loan providers to offer cheaper and a variety of products. At the same time, it helps to boost transparency, which allows borrowers to quickly compare pros and cons of different loans and select one that is most suitable for them.
Types of Loans in Denmark
Whether you are a local or foreigner, you can apply for a loan in Denmark as long as you fulfill certain criteria, like having a fixed address in the country, stable source of income, good finances, and a job. Also, you need to be at least 18 years of age and have a bank account in one of the Danish banks.
Once you fulfill these criteria, you can apply for one of the following loans:
Bond Loans: This particular loan is based on bonds. The bank determines the price of the bond and then proportionate cash is disbursed to the borrower. The price of the bond is determined by taking the price quoted on NASDAQ Copenhagen and the subtracting the price spread. It is prudent to remember that the bond loan will always be less the bond amount, which is the loan principal.
Cash Loans: As the name suggests, when it comes to cash loans, the proceeds are disbursed to the borrower in cash. Here, the lending bank takes into consideration the price of the bond as quoted on NASDAQ Copenhagen and then subtracts the price spread. The resultant amount is disbursed in cash. In case the bond price is below par, it results in a capital loss, which the borrower needs to repay during the term of the loan. Hence, capital loss is recovered by charging the borrower a higher loan rate.
Private Loans: This is a new method of borrowing in Denmark. Today, anyone who needs access to quick money can opt for a private loan, without having to go to traditional lenders and financial institutions. You can get a private loan from a peer-to-peer lending platform and it could be the best option for you if you have a poor credit score. People with less than favorable credit score are often denied loans and private loans are their only recourse when they need money quickly and urgently. While it is easy to get a private loan in Denmark, make sure you up-to-date with the repayments. Otherwise, it could become a nightmare.
Student Loans: As a student, money crunch is a fact of life. If you need money quickly, you opt for a short-term student loan. This loan is approved within a few hours, as the entire approval process occurs online. The good news is that the loan is designed for students and hence, it comes with a lower interest rate and fee compared to traditional loans in Denmark. At times, this short-term loan can be available without interest and fees, but be careful about repaying it. If you default, the lender will make you liable for the interest rate and fees, and the rate can be exorbitant in this case.
There is another student loan called SU Loan, which has a longer application and approval process. If your money need is not urgent, you can apply for SU Loan, which is one of the cheapest loans in the country. Else, you can go with the quick, online student loan.
The Final Words
These are some of the popular and most sought-after loans in Denmark that you can choose based on your need. If you are looking for quick and fast disbursal of loan, check online to find the best loan provider for your needs.