Same bank, different country = different borrowing costs

There are known differences in loans, but did you know that the same loan can be priced differently depending on the country in which you take it?

We compared the loan costs of loan providers in the Nordic countries. Goodbank, Bank Norwegian, Good Credit and Collector offer consumer credit to their customers in Finland, Sweden, Norway and Denmark, but the interest and costs vary.

When comparing the cost of a loan, you should be careful. In our loan comparison you can compare the products of different loan providers:

The total cost of a loan varies

The total cost of a loan varies

In our comparison, we looked at how the total cost of loans varies from country to country and from one loan to another with a $ 5,000 loan over a 36-month loan period.

($ 1 = SEK 9.69 = NOK 9.02 = DKK 7.43)

Although the Nordic countries are much the same, their markets are slightly different. This has also contributed to different pricing strategies.

Here’s a closer look at where and how the same loan prices are formed in Finland, Sweden, Norway and Denmark.

EUR 5,000 loan, 36-month loan period

The comparison shows that Good Credit offers the cheapest loan in Sweden. The EUR 5,000 loan will pay the lowest interest rate at EUR 5,319. In Sweden, the interest rate depends on the customer’s credit rating and ranges from 3.95% to 12.95%.

In Finland, Good Credit’s strategy is different, so it offers a fixed margin of 12.7% on a EUR 5,000 loan in Finland. On the other hand, in Finland, Good Credit offers a lower interest rate on a higher loan amount (3.7% on a loan of more than € 40,000).

The most expensive loan is offered by Norwegian Bank in Denmark, where the highest loan rate increases the total cost of a loan from EUR 5,000 to EUR 7,315.

The special features of the Finnish loan market include various additional costs, which is why some lenders market the loan even without interest . By contrast, in Norway, for example, interest is often the only cost of a loan. For example, Goodbank and Good Credit do not charge a loan opening fee or account management fees, which increase the APR   often significantly.

In the Nordic countries, Goodbank offers the most flexible Flexible Loan in Finland with a margin of 7.7% (pricing is basic to the customer).

How does risk pricing work?

How does risk pricing work?

Our comparison makes it clear, some of the lenders in the market use “customer-specific rates” in their pricing. In practice, this means that the interest rate on the loan is not the same for all customers, and in our comparison, the lenders operating in this way have the minimum and maximum rates.

When a lender evaluates an application and makes a decision to grant an unsecured loan (eg consumer credit or flexible credit), the risk profile of the customer has a significant impact on the decision.

The risk assessment uses the background information

The risk assessment uses the background information

That the borrower is asked to provide. Background variables include eg annual income, type of employment, type of housing and amount of home loan. Based on these questions, the lender estimates the risk of non-repayment of the loan. The price is thus determined by the customer’s level of risk. Elsewhere in the world l Your Facebook friends, for example, may have an influence on getting Aina!

Thus, in risk-based pricing, the customer does not know in advance at what price the loan will be granted to him or her. The discount rate used in marketing may not be available to many customers.