I thought here to try to show a little about how big the differences can actually be for borrowing of different sizes. What I am talking about in the first place is the cost per month.
One thing to always keep in mind is that it is often difficult to know in advance what interest rate you will receive when it comes to private loans. This is when the lenders usually talk about an interval where the interest rate is within which it is ultimately determined depending on the desired loan and who wants to borrow.
Few lenders offer smaller private loans that have a fixed interest rate
Therefore, when I first count here, I intend to use the example interest rate this loan intermediary has used. They have calculated 17.9%, which may be a bit high for some private loans.
If you borrow with this interest rate SEK 400,000 in 15 years (which is probably Bank Norwegian) and with this interest rate, the total monthly cost for the first month would be as much as SEK 8,160, where interest accounts for about SEK 5,960. This is then calculated with straight amortization which is cheaper in the long run.
The total interest cost would be SEK 539,681 during the entire loan period, which is very much actual, which corresponds to quite exactly SEK 3,000 on average per month. Then of course amortization is added on this sum.
Now we must remember that this is the example interest rate
They used and it is probably clearly more justifiable for loans of SEK 50,000 or something. One with the same interest rate and taken in 4 years would cost SEK 18,260 in total, which would be SEK 380 per month. It is still a fairly high sum we are talking about but it is clearly manageable. The important thing is that you who borrow money are aware of what it really costs to borrow. This loan of SEK 50,000 means that in the next few years you will pay out SEK 68,260 in amortization and interest.
If you look at a slightly more realistic SEK 400,000 loan, the figures can probably be a little better iaf. At the moment, only Bank Norwegian is offering this amount to its borrowers and they have the lowest interest rate 4.99%. To add a little extra to that, we therefore say 7%, which is quite a lot less than the almost 18% I counted on before.
The cost will then total a total of SEK 211 170 (more than SEK 300 000 less in total), which is approximately SEK 1,170 in interest expense, calculated per month.
As you can see, borrowing money is not cheap
And you should be aware of that. What you have to do is to set what you intend to do with the money in relation to what it costs and this is just something you can do yourself.
For example, I would probably think it was far too expensive to borrow money for a holiday in Norrland in the winter, but someone who likes snow and cold might think it would be worth it. It’s just that you really think about your decision before it is made.