October 6, 2019

The golden age of consumer credit

Just over a decade ago, unsecured instant lips and consumer loans made available to the consumer have become rooted in a rigid Finnish consumer society like a large oak tree. We can talk about the so-called golden age of unsecured consumer credit.

Consumer credit without collateral is a particularly attractive form of loan. The interest in consumer credit is illustrated by the explosion in popularity of consumer credit – for which there is no end yet.

Developments in consumer credit in figures


Surveys commissioned by the Bank of Finland over the years show that unsecured consumer loans are being taken out now more than ever. The popularity of unsecured consumer credit is definitely based on its easy and quick availability.

In addition, the abundance of supply also contributes to the growing popularity of consumer credit among citizens. On the other hand, consumer credit itself has undergone many changes and, for example, the idea of ​​a short-term loan is virtually no longer valid, even though consumer credit is still theoretically defined and perceived as a short-term loan.

This is because the loan terms of consumer loans have become longer in the eyes. Currently, the average repayment period for unsecured consumer credit is approximately 12 years and 8 months. If we look back at history all the way to 2007, the average payback time was 7 years and 9 months. According to these statistics, the payback period can clearly be seen to be longer.

The volume of consumer credit is also statistically significant


The growth rate of loans a year ago in early 2017 was up 13.7 per cent. Quantitative growth in loans will be affected by the slowly recovering Finnish economy and thus citizens will have the courage to lock in their euro to unsecured loan money. And surely borrowing increases will not be denied even a major change in lifestyle. Digitalization, in turn, influences lifestyle changes. Citizens are urged to spend, sometimes in an aggressive way, whether in the form of loan money or not.

Interest rates are also responsible for the growing popularity of consumer credit; interest rates on unsecured consumer loans have fallen year by year and recently have fallen by as much as one percentage point. Currently, the average interest rate on unsecured consumer loans is 4.97%.

Traditional banks will not be able to compete with unsecured consumer loans, as invariably a cash loan from a bank will always require a certificate from the consumer and a financial statement – in most cases, the required financial security or guarantor. As a result, applying for an unsecured consumer credit online quickly and easily is even cheaper, and saving the consumer is of course a time – and in smaller areas, having a face is sometimes difficult to apply for.

Increasing popularity of benchmarking services


Alongside unsecured consumer credit, there are also various comparison services that offer you the opportunity to compare and explore different types of leverage and consumer credit. The purpose of the comparison is to find out where the consumer will find and get the most affordable and unsecured loan that suits their needs.

Comparison services are not in themselves a direct way to apply for a loan, but the actual loan application is done through the lender’s website. In addition, the benchmarking services provide credit counseling assistance and help with morale. You can also find some interesting information about traditional money.

Over-indebtedness and default – A new scourge for Finns

Alongside the debts of citizens, debt insolvency and over-indebtedness are marching along. Unfortunately, this process is a vicious circle that is usually impossible to get away with. Without over-indebtedness, it is also not possible to avoid the mere interest of unsecured loans and credits by incense or other popcorn.

Where do Finns’ sudden over-indebtedness come from? People are being urged to spend, albeit with loan money, and that’s what the consumer is trying to do, who, for whatever reason. Usually, even nowadays, consumption is at risk of getting out of control of one’s own finances. The Finnish economy, for its part, exudes happiness when consumption has risen and, as a result, key figures in the economy. When one end is pushed – the other is pulled and so is ready for an over-indebted nation.