Bank Loans, Credit Cards & Interest Rates
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- Finnish Bank Loans
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- Interest Rates on Credit Cards & Loans
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- Home Loans - part of the Housing section
Criteria for Obtaining a Loan
As in any developed country, the primary criterion for obtaining a loan is your capacity to repay the debt. Steady income is a major plus, but having a temporary job is not necessarily an obstacle to obtaining a loan if employment prospects in the industry are good. Criteria include:
- How much you want to borrow
- Your residence status
- Your credit rating and history
- Guarantor(s), if available
Contact the banks directly to arrange interviews. You can make a formal loan application at an interview if you wish.
- Make enquiries to as many banks as you can to see what they offer - the differences in rates, margins and charges can be substantial
- The banks have specialists who will also explain tax issues - they will tell you which documents the tax authority requires
- Make sure ALL documents are translated into English, not just the ones the bank suggests are appropriate
As is the case in every country I'm aware of, a recent immigrant usually find it difficult to get credit until they have established a significant bank account and a history of steady employment. Experiences with applications for a credit card appear to vary widely between banks, end even between branches of the same bank.
Essentially, if you have been in Finland long enough to establish a satisfactory credit rating and you have a regular income, you should have no trouble getting a credit card. But, how do you get a credit history when they won't give you a loan or credit card without one? The regular income aspect goes a long way to making you a viable risk, and long-term residency doesn't hurt either. However, having a large amount of money in the bank will NOT necessarily guarantee approval for credit. All you can do is ask.
If you are self-employed, chances are you don't have a regular income. When applying for a card you will be asked to provide your company's profit/loss statements for recent years - if these look promising you will once again be in good stead to be approved. However, it may be that you are self-employed and have only been resident in Finland for a relatively short time!
One option, if you absolutely require a credit card and have the requisite funding, is to pay a security deposit to the bank. The deposit will be three times the amount of the credit limit for which you are applying, and will be held by the bank for a period of three years. If you pay your bills on time for that period the bank apparently then considers you a safe bet, and will return your deposit.
The trend in interest rates on consumer credit in Finland has been fluctuation, with an increase over recent years. The average rate was 3.93% in September 2014 (up to 4.41% in November), compared to 4.48% in September 2013, 4.14% in September 2012, and 4.03% in September 2011.
The trend in interest rates on housing loans in Finland has been fluctuation, with a decline over recent years. The average rate was 1.66% in September 2014, compared to 1.99% in September 2013, 1.76% in September 2012, and 2.54% in September 2011.
The trend in interest rates on other loans in Finland has been fluctuation, with a decline over recent years. The average rate was 2.16% in September 2014, compared to 2.43% in September 2013, 2.31% in September 2012, and 3.24% in September 2011.
Source: Bank of Finland. Comprehensive statistics on loans, deposits,
housing loans, student loans and more are available at
www.suomenpankki.fi > Statistics
Debt problems tend to 'snowball' and need to be addressed immediately in order to avoid accumulation. For example, if a debtor fails to communicate with a creditor, the creditor may employ the services of a collection agency, and those recovery costs could be added to the existing debt. Dealing with financial difficulties is routine work for financial institutions; communication and co-operation with debtors is essential and appreciated.
Solutions for financial problems are available, such as extending payment terms for loans, freezing the interest for late payments, or even putting a temporary 'hold' on payments until the financial situation improves. One of the worst things someone in financial difficulties can do is to simply ignore the situation.
The Finnish Consumer Authority provides extensive advice on debt / credit payment / collection issues.
Finnish Consumer Authority > Payment, bills and debt collection: Financial and Debt advice in English, Swedish, Sami and Finnish