What is a loan and how does it work?

Who needs a loan and why? Almost everyone needs to borrow money sometime! Here I work out things that may seem obvious, but not obvious to everyone.

Here is some basic information about finances and the conditions for getting a loan. You can find different types of loans at Good Finance, but you can also compare loans there just like here. My recommendation is to always compare loans before borrowing money.

Who can borrow?


Those who make a lot of money can easily buy what they want. Low wages mean difficulties in buying what you want. Those who have not paid their bills may not be able to borrow at all. Anyone who does not manage their bills will receive so-called payment notes. There is something called a payment note that is seen when you are borrowing money from a bank, or if you are buying something “in chalk” in a store.

Some people cannot borrow money for a variety of reasons. The bank may not approve loans from foreign nationals. It may be that the person is not of legal age or that the person is not within the specific age limit (too old or too young) that the lender has set. It may also be that the person in question does not have a sufficiently high salary or has applied for loans too often.

payment Notes


Payment markings are visible at UC. UC, or the information center, is where companies and authorities collect information from people who have not paid their invoices or purchases. If you receive a payment note, it will be visible for 3 years if you do not appeal and manage to get it claimed.

If you do not pay your debt even after receiving a payment note, you end up at Kronofogden. It is the authority that is responsible for managing indebted persons finances. They have the power to obtain indebted persons’ possessions if the person in question owns expensive equipment such as cars, real estate, expensive watches and so on. If the person refuses to let in the chancellor, it can be considered to be hand in hand with the help of the police.

Compare loan terms

Compare loan terms

You who can actually get a loan may need the money for a lot of reasons. You may apply for a mortgage to buy a property, or you may apply for a car loan.

You may be a dedicated movie fan and want to buy a cool TV but work as a waitress. Then you might not be able to afford to buy a TV. If you go to the first best lender, the risk is partly that you do not meet the requirements to borrow from the particular lender, then interest rates and fees differ between different lenders.

You probably have to gain from applying for a preferential loan instead of an “expensive” loan. Therefore, you should always compare different lenders before applying for a loan.

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