Whether you’re hit with a financial emergency, need some help to cover your bills, or have to make a large purchase in the near future, there may come a time when you need to borrow money.

However, choosing which loan to go with can feel overwhelming with hundreds of different loan options available from dozens of companies. It’s often hard to separate the loans that are worth considering, and which you should avoid.

In an effort to help you out, this guide is going to go over some tips and advice for finding the best loan in Finland for your specific needs.

Understanding the Different Loan Types

The first step in choosing the best loan is learning about the different loan types. There are many options, and each has its own pros, cons, and use cases. Among the most common types of loans are personal loans, which can essentially be used for any reason. However, not all personal loans are created equally.

Some of these are secured, while others are unsecured. A secured loan requires collateral (such as a vehicle, home, or investment account) to protect the lender. If you don’t repay the loan, the lender is legally able to take possession of the asset you put up as collateral.

On the other hand, an unsecured loan has no collateral, and thus the lender has no legal claim to any of your assets.

But in addition to personal loans that can often be used for anything, there are also loans with specific purposes. This includes auto loans, home loans, student loans, and home renovation loans. There are even debt consolidation loans which are meant to be taken out to pay off other loans and existing debt to simplify your monthly payments.

Once you’re familiar with the different options on the market, you’re better able to narrow down the list to find one that works for your needs.

Things to Consider When Comparing Loans

While knowing the type of loan you want is important, you also need to learn how to compare loans to one another. The first thing you need to consider when comparing loans is the interest rate. You should aim to find the lowest rate possible, as it could save you tons of money.

While a percent or two difference in an interest rate may not seem like a lot at first, it could lead to paying hundreds or even thousands more throughout the loan.

Next, you need to consider the fees you’ll be responsible for paying. This includes application fees, loan origination fees, late payment fees, and early repayment fees. While many lenders are public about fees, there may also be some hidden fees you need to search the small print of the loan agreement to find.

Of course, you should also compare the loan amount that different companies are willing to lend you. If you need €50,000, the last thing you want is to spend time going back and forth with a company that only lends up to €25,000. As a result, always make sure any lender you speak with is willing to provide the amount that you need.

Similarly, make sure to consider the loan terms, as well. Loan terms can range from anywhere from a few months up to multiple years. A longer term means smaller monthly payments, but more interest paid over the lifetime of the loan. Conversely, a short term means high monthly payments, but you’ll save on interest.

Something else worth considering is the speed of the loan process. Some lenders offer nearly instant loans that often have the funds in your account within a day, while others may take days or even weeks before you get the money you need. This is especially important to think about if you need the funds fast to deal with an emergency.

The Importance of Your Credit When Searching for a Loan

It’s also important to consider your credit while looking for the right loan. If you have poor credit from past missed payments, you’ll find that many lenders may not be able to work with you. Even if some will, the terms and interest rates will often be unfavourable.

As a result, it’s a good idea to get your credit in a good place before applying for a loan to increase your chances of being approved and getting a fair rate and terms. Your credit is so important during this process as it shows whether you’re able to handle debt or not.

If you have great credit, it shows lenders that you’ve successfully made payments in the past and no lenders have had any issues with you. But if you have marks on your credit, it’s a sign you’ve missed payments and are riskier to lend to.

Online vs. Traditional Lenders

Today, another major decision that people are faced with when borrowing money is whether to use traditional or online lenders. In the past, your only option for borrowing money was from traditional lenders like banks or credit unions, but that’s no longer the case thanks to the growth of online lending.

While both options may be able to get you the funds you need, online lenders are often a more financially intelligent choice. They offer more convenience, better terms, a faster process, and more flexibility.

There are even loan comparison platforms that let you instantly compare offers from dozens of lenders in one place, with only a single free application. This also extends beyond loans as there are credit card comparison platforms, online banks, online budgeting apps, and several other virtual financial tools to take advantage of.

Conclusion: Finding the Right Loan For You

No matter why you need to borrow money, it’s crucial to choose the best loan for your needs. While finding the right one can seem overwhelming, as long as you know your options, know what to consider when comparing loans, and know the importance of your credit, you can end up with a great deal.