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Loans in Norway; a good way to rescue a strained budget

Norway is a great country especially for lovers of nature and beautiful sceneries. The mountainous terrain dotted with rivers, fjords and coastal cities like Kristiansand, and Trondheim can be great spots to visit. Actually, some people who travel to just visit Norway sometimes get enchanted with it’s unique terrains. Those who like adrenaline games can go ice skiing on mountain tops. Were it that Norway doesn’t experience piercingly cold winters then so many could have already relocated there. All these notwithstanding, anyone moving to Norway shortly or for a planned relocation must be very alert when it comes to finances. 

Remember, in Norway, you won’t make it by being other people’s burden. To a great extent, people in Norway are self-reliant and if they experience a challenge resort to seek out help from the municipality. All this means that unless it’s an emergency of which insurance cover should be helpful, one can’t expect friends and relatives to chip in. So, this is where applying for a loan facility becomes a necessity. No wonder we break down what may be necessary to avoid inconveniences around securing a loan. 

Why Visitors and Expats who fall on each other to go to Norway need loans

It is undeniable that Norway as a country exhibits a very high quality of life and there is no need to worry about the high cost of living here. This wasn’t the case before when the country relied on sea voyaging and fishing as their mainstay economic activity. The story has since changed with the discovery of oil. Anyone who knows something about the Norway sovereign wealth fund can explain how this oil greatly turned around the story of Norway’s economy. 

Did you already know that Norway is ranking number six of the happiest countries in the whole world? I thought you should know. Well,  you can now see one of the many reasons why you should move to Norway and that there is no need to worry about high costs. There are great fruits and benefits that await you in Norway. 

What living in Norway portends – Money matters

If you are still thinking about moving to Norway, then you had better stop thinking and start acting now. It is a happier and peaceful life that almost everyone seeks to find and you will surely find this on the floors of this Scandinavian state. You certainly realise that there is plenty to love about living in Norway. Talk of the excellent work benefits, high wages and salary, superb healthcare services, stable public infrastructures and welfare, not forgetting the stunning scenery.

Fortunately, sometimes when we talk about a high quality of life, we tend to look from a general perspective. However, from a personal level, you could be earning a decent salary but still you gotta stretch it further in order to achieve your goals. Sometimes, it is just that you have a financial need that is beyond your current earnings and the only place to get money is if you borrow. Just as an emphasis, any money which doesn’t belong to you and given by a lender qualifies as a loan. The key thing here is that you will at one time need to repay. This definition still holds true for someone looking outwards to get some money for a budget shortfall or with the sheer intention of buying some expensive property like a car, house and more. 

Getting a loan in Norway isn’t a bad idea

To be blunt and forthright, the fact that working in Norway guarantees the working class lucrative salaries doesn’t mean they will never get cash strapped. Once in a while, things just go awry or unexpected needs come up and demand to be met as when you need to upgrade the interior of your accommodation (you can read more about that on the Norwegian website interørdesign.info). In such situations, one may not have the luxury to put forward the need to a later date.

It also looks awkward and uncomfortable to request somebody for lets say NOK 20,000. No one in Norway has money hanging to flash at the slightest request. It is simply unbecoming to expect to borrow large sums of money from individuals in Norway yet there are so many credit giving entities in the country. 

Taking a loan as an individual is not always a sign of weakness at all for most people have grown through loans.  This is something that many people have done at one point or the other during their lives. As a matter of fact, many reasons are attached to why most people take loans. Norway has had a massive excellence and stability coming from its oil and fish trade, very low levels of corruption, and great social welfare. But growth through loans is very common even with a well-developed economy. You already have the idea but lack the resources, what do you do? Simply  get a loan and make your ideas come true by deliberately investing. . 

This is what a Loan means in Norway

A loan in Norway means more than just what we are accustomed to. Like normally, most people never consider money lend by a family member as a loan but that is different in Norway. If your brother, sister, mum, father or any family member gives you some money that need to be refunded, its clearly a loan. It’s good that you respect the agreement failure to which your “credit worthiness” become in doubt and risk not getting such help in future. It my sound funny and absurd but that’s the reality. 

Loans in Norway may be gotten from a financial institution, a friend, family, or a business. A soft loan given by a family member must be returned. But something with such soft loans is that they are always small amounts basically intended to foot a small deficit in a budget. A budget deficit that runs into tens of thousand Norwegian Krone will definitely take you to registered financial institutions. 

Formality in Getting a loan in Norway

In Norway, loans have to take a formal approach even if given by a family member. You will have to agree on a repayment plan and deadline. This is the same thing that will naturally follow if you turn to banks and other forms of credit lenders. They will demand that you pen down a loan agreement which sets out the detailed terms and conditions of the loan. You, as the borrower, will make an agreement to pay back the principal amount of the money given to you plus the interest.

In Norway there are various types of loans that are currently being offered by the legal financial institutions. Therefore, it is of great significance if you explore loans for Norway and get to learn about the various types of loans that would be available for you. For this article, we get to learn all these by offering a concrete understanding of the entire loan process.

How Loan Financing Stands in Norway 

For a long time, there has been a long legal tradition in regards to financing in Norway in general. There are some various things that you need to know as you intend to enter into a financial agreement under the Norwegian law. Dealing with financial companies as parties to such financial agreements warrants access to such information. There are numerous legal topics in regard to financing in Norway. But for today, let’s narrow down and look into loan agreements for various types of loans available in Norway.

Loan Characteristics for Norway 

Despite the fact that Norway has a varied array of loans available for offer, all loans have a number of common qualities. Loans share some very common characteristics like;

• All loans have a principal amount
• They all charge interest as a major charge to the loan
• All have a specified period of service called the loan term (short-term/ long-term)
• The amount repaid every month by the borrower which is the payment amount

Types of Loans Available in Norway 

Many people have various reasons attached to their need for a loan. However, among the most common reasons we have car loans, home loans, business loans, personal loans and also unsecured loans. Now let us look into these types of loans available in Norway in detail in order to help you have a great understanding of what lies at your disposal.

1. Refinancing Loans in Norway

These come in the form of unsecured loans. A good number of Norwegians have their own range of reasons as to why they would choose to take unsecured loans. Unsecured loans are loans that could probably be a nice tool if you can manage to pay back whatever you borrowed on time. Learning how to take advantage of an unsecured loan without having to pay back with too much interest accumulated is the key.

However, any failure to payback on time or even accumulate many small loans, is likely to become a financial burden. Taking an unsecured loan is not bad at all but what matters is the degree of discipline in managing such loans. Refinancing is therefore a very good tool where you get a collection of all small loans under one roof. It is also much easier for you as you can comfortably pay without forgetting.

2. Green Loans in Norway

I am not sure if this type of loan is already available in the other parts of the world. But that is not really important for all that matters now is to know that Norway is starting to also offer such loans. Yes, everything is sustainable since anything can be sustainable including loans. Green loans are defined as loans that are primarily used to build a greener or a more sustainable home.

Green loans are greatly gaining ground in Norway especially with the fact that people can save a lot of money with it in the long run. It is a fact that there are several considerations that you have to make before having to take any loan. One of them is definitely based on whether you are capable of managing its affordability or not. Whether the loan is for investment or not, let it at least be something that will help save you some money in the long run. With this in mind, you can now decide the best way to go. 

3. Home Loans

When you are new in Norway, you will realise that renting a house or a flat can be pretty expensive. I mean what would you expect since we already know that the cost of living is high in Norway. But there is no need to worry since a home loan is cheaper than renting a house. If you have plans of staying in Norway for a longer period, then it would be best if you consider purchasing your own property. 

However, there are key factors that you must put into consideration before embarking on such a huge step. Buying a home is not going to be easy as it is not a one-time step that you will do once you arrive here. You will focus on settling first then finding a job but if you have a job already, register your residence if you come from a country outside the EU. Residents of the EU who live in Norway don’t have to register their residence if they have been to Norway for at least 3months. 

So, register your residence and also think about your duration of stay in Norway for this to be looked into. After registering and living in Norway for some time, check on your credit worthiness. Note that you should be confident of your credit worthiness as repeated rejections for a loan may taint your credit ratings in Norway. It is always good to your credit worthiness before heading to the bank for a financial commitment to buy your first home.

4. Student Loans 

Through the Norwegian State Educational Loan Fund commonly known as the Lanekassen, you as a student can get a loan. Sometimes you as a student may lack enough resources to see you through your studies as this is a normal occurrence to many people trying to pursue their career. Lanekassen will offer you with either a loan or a grant. But these two can only be available to students pursuing their studies at the Norwegian universities and colleges.

In some instances, some students studying abroad outside the Nordic region would also qualify for a loan from Lanekassen. All that is needed as a requirement in order to qualify for a student loan is for you as a student to pass all your exams every other semester. However, if you excel exceedingly by achieving high grades point average for the semester this loan automatically becomes a grant.

Norwegian student loans do not by any chance attract any interests. All that happens is that the legal loaning institution will calculate your loan and grant levels using multiple factors. For instance, tuition cost, whether you as the applicant live alone or with parents, rental cost if you are renting an apartment, and income status.

5. Personal Loans

Once you have lived in Norway for some time, registered your home address, and have a settled income, you can obtain a loan. Personal credit is a valuable tool available for you in managing your personal and household finances, be very careful not to accumulate unnecessary debt. Besides, it is always good that you must understand all the full terms of any loan you are taking in Norway. 

Yes, I know you are asking yourself if personal Norwegian loans are also available to foreigners living in Norway. Yes, it is possible to secure a personal loan as a foreigner in Norway. However, you must have lived here for several years. You would need a permanent residence permit to qualify and usually this could take some pretty good time to mature. Besides, financial institutions will demand to see your tax return history from several full years to ascertain your income.

6. Consumer Loans

A typical consumer loan in Norway can offer you a loan maximum at NOK 250,000 and doesn’t require you to produce any collateral. With a consumer loan, you will of course be presented with a repayment plan that is likely to run for at least five years. However, there is room for an arrangement for he/she who needs a shorter period repayment plan. 

Application for a consumer loan in Norway can be done either physically or online. The online application, though, is only available in Norwegian apparently. A consumer loan is a loan that you can only apply if you need some additional money for a short period. But you must have a very stable and regular source of income and you are 23 years old and above.

7. Business Loans

If you are a business person who is ready to withstand the heavy tax burden, Norway is where you can set the ball rolling. For a start-up or refinancing of your business, you may consider getting a business loan from a Norwegian bank. However, most of the Norwegian financial institutions are likely to turn down loan applications from small business owners. Yes, such kind of steps are very disheartening to young entrepreneurs in Norway. 

Basically, what the current picture paints is that getting a business loan is not a walk in the park in Norway. I believe this is in connection to the fact that there are very minimal independent loan financiers to offer business loans. In a start-up or growth phase, many companies have some conditions that they must meet to qualify for a business loan.

The bank issuing your business with a loan will require your company’s debt servicing capacity and adequate collateral. You will also need to state clearly to the bank concerning your project that the loan seeks to finance. It is very important to let the bank feel very confident that you will be able to repay your loan.

8. Car Loans

Whether you are looking for a new, used, personal, family, or business car, Norwegian financial institutions can offer you with very flexible loan terms. What you have to do is to identify your dream car and check on your credit worthiness for you to secure a car loan. The good news is that most of the Norwegian banks provide up to 100% ex-showroom price. Other than this, they also offer a 75% of the on-road value of the car. 

Processing your Loan in Norway 

Having looked at almost all the available types of loans in Norway, you could have interest in any of these. If you feel eligible and ready to apply for a loan in Norway, there are various steps that you will be required to follow. However, these steps may vary somehow depending on the type of loan you are applying for. Nonetheless, most Norwegian loans follow through the following steps;

1. Checking of your credit score

It is your credit score that will show the bank you are applying for a loan from how capable you are to repay your loan. Usually, in Norway, a score of 700 is considered to be a very good score. However, a high credit score will greatly improve your chances of getting a loan with a more favourable interest rate.

2. Make a Prequalification Application

Once you have made a decision to go for a loan, contact your bank or the financial institution about your intentions. The bank or the financial institution will obviously want to know how much you intend to borrow, your employment status, and the purpose of borrowing. In addition, you must state your income and your social security number. Prequalification gives you an idea of what the loan terms are expected and you also get to know whether your loan will be approved.

3. Do a Comparison of available loan facilities

Submit many prequalification applications as much as possible to a number of different banks and financial institutions. After which, you can now do a comparison of the available loan terms and make the best choice out of them all. Look into important things like the amount you are able to qualify for, the interest rate, loan term, the monthly repayment, and other fees involved.

4. Now Submit a Formal Application

When you decide on the best loan offer, you can now proceed to make your formal loan application. Ensure to submit all the documents needed by the lending institution since a loan application remains to be a hard credit inquiry.

How to Boost Your Chances of Qualifying for a Loan in Norway

A universal means has however not been discovered yet in Norway to help individuals win their loan application. Credit worthiness and income level vary from one Norwegian lender to the other considering factors like education level or free cash flow. Loan issuers however, operate under a common course. They all want their money paid back as planned and will only approve borrowers who satisfy their criteria.

Take a look at some of the suggestions I have for you that will definitely help you boost your credit worthiness in Norway.

1. Clean up your credit

Your credit score is the key factor that a bank will first look at to be able to decide whether you are qualified or not. The higher your credit score, the higher the chances of your loan being approved. So, you have to at all times ensure that your report has no errors that may end up negatively affecting your score. Moreover, you must be at the top of your payments with all your debts. 

2. Ensure to have a Rebalance of your Income and Debts

One of the other requirements by the bank when you are applying for a loan is to submit your current income level. You have a chance of including part-time earnings into your income so as to increase your income level. In addition, pay all the debts that you already have so that your income level remains high.

3. Never Ask for Too Much Money

Its considered by banks as a great risk to asking for more money than what you actually need to sustain your financial goal. In most cases, if you ask for too much money, your loan may be declined. Besides, a large loan amount could end up squeezing your budget.