This guest pen is written by the Finnish crowdfunding and peer-to-peer loan service Fellow Finance, through which both individuals and companies can apply for a loan.
You should carefully prepare for applying for a loan. For example, consider your loan repayment ability and find out how much you are willing to pay each month. Before you apply for a loan online quickly and decide to sign a loan agreement, be aware that you are also familiar with the general terms of a loan.
Creditworthiness refers to a person’s ability to repay his debt. The rating is influenced by, for example. the person’s age, type of residence, level of education, annual income, form of employment and other debts. The better the creditworthiness of the borrower, the lower the interest rate they will be asked for due to the lower risk of repayment.
The borrower may choose to keep the month (s) without having to repay the loan. For those months, the borrower pays only the interest. After the grace period, the borrower will continue to pay off his loan as usual.
All loans include different service charges. While different loan providers usually have their own terms for their service fees, service fees are usually related to some form of loan opening fee and monthly loan account maintenance fee.
The annual percentage rate of charge
The current annual interest rate includes not only the nominal interest rate (the interest rate charged on the loan) but also the other costs of the loan, ie in practice the above-mentioned service charges. Often, when looking at annual rates for loan offers, it can be seen that at first glance, the most affordable loan offer is actually one of the most expensive options when adding service fees. Thus, the APR should always serve as a measure of the borrower’s thinking about the cost of the loan.
There is no official definition of instant leverage, but generally, instant leverage is understood to be a quick and fairly small loan amount which is basically granted to anyone without a careful analysis of the lender’s repayment ability. As a result, the effective annual interest rate on instant loans easily rises by more than 200%, as this repayment of a borrower can offset the credit losses of the majority of borrowers.
In a flexible loan, the borrower has a credit account provided by the lender, from which it is possible to withdraw money to his own account within the limits of the credit line, if necessary. The credit line is also called the limit. The loan granted will always be released to the borrower once it is repaid. The borrower also pays interest only on the credit he has drawn from the credit account for his own use.
Equity loan, where each monthly installment is equal until the end of the loan repayment period. These monthly installments consist, in principle, of loan repayments, interest and handling costs.
Peer-to-peer lending is the process of borrowing private individuals on the Internet without any business. For example, Aapeli car repairman has got some extra money and instead of resting his account and agrees to lend it to firefighter Pekka. At the same time, individuals Pekka and Aapeli agree on loan terms such as loan amount, repayment period and loan interest without any other parties. An example of a Finnish peer-to-peer loan service is Fellow Finance.
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