When it comes to loans and borrowing money, there are a lot of different things that we have to keep in mind. One of those things, of course, is in relation to the level of income that we have to be making in order to qualify. Sometimes this will depend on the lender, butmore often than not, there are country-wide standards set in place.
One example of this is right here in Norway. For the most part, if your income is under 120,000 NOK, you likely won’t be able to get a loan. After all, the whole point of the application process is to hopefully screen out any applicants who are not eligible and have a low chance of actually paying the principal balance back.
There are some intricacies at play here, though – the rules aren’t exactly hard and fast, in the manner of speaking. Rather, there are some exceptions (to an extent), and that’s part of what makes this process such a difficult one to navigate. Learn more about loans uten inntekt, and how that would even work.Feel free to stick around and explore our comprehensive resources.
Income and Loans: How They’re Related
As most of us already know, there are a lot of requirements when we apply for loans. They include all sorts of things, but perhaps the most notable is that of having income. What does this entail, though?
At first glance, the answer to that may seem super obvious. Of course, we need to be making money in order to borrow it, because how else would we be able to pay back a loan? In truth, there are a lot more intricacies at play to be aware of.
There is more than one way to define “income,” and that’s probably the core of the issue here. Don’t stress out and worry that you won’t be approved for a loan because you don’t have a traditional job. “Income” can be defined in a few ways in this context.
If you’re a contractor, freelancer, or you work from home, you may not be earning income in the traditional sense, but you’re still going to be able to apply for and qualify for loans so long as you fall in that 120,000 NOK a year threshold. The only big difference you may experience is having to work a bit harder to prove that income, if you aren’t receiving traditional paystubs.
Otherwise, your experience will pretty much be the same as any other person who’s submitting a loan application. The important thing is that we aren’t trying to apply for a loan when we genuinely have zero income. That ca n be a pretty big problem.
Responsible Borrowing Practices
Due to the nature of this topic, especially if you’re interested in a loan but don’t fall within the threshold of 120,000 NOK annually, it’s good to take a moment to sit back and consider how we can be responsible about borrowing money. First things first: you should never try to take out a loan if you know that you can’t afford it.`
Admittedly, this is somewhat covered by the fact that you have to meet a certain income threshold to qualify in the first place. However, just in case that isn’t abundantly clear yet, it’s a bad idea to borrow if you can’t afford the repayments. Unfortunately, even if it seems like it could be something that’s helpful to you, the repercussions from not being able to make repayments are really not something that are easy to escape from.
Fortunately, there are plenty of ways that we can still borrow money but do so responsibly. It just requires some financial savvy and knowledge, but that’s what we’re here for!
Making a Budget
This is probably the first step that you’ll want to take if you’re planning to apply for a loan, but you aren’t exactly certain about how the repayments will fit into your life. Thankfully, many of us do already have a budget in one form or another, as you can read about here: https://www.experian.com/blogs/ask-experian/how-to-make-a-budget/.
Consider creating multiple budget plans – a monthly, a weekly, and an annual budget can all be helpful in ensuring that your finances are in the best possible shape. While doing so, also consider how taking out another loan would impact on your existing financial obligations. Many of us already have some debt, in addition to covering expenses like housing, gas, electricity, and phone or cable bills.
Unfortunately, all of this leads up to the fact that there will be some people out there who just can’t really afford another loan right now. That’s okay, and that isn’t some negative reflection on the person. Rather, it just means that they should explore some other options.
Credit Scores
Something else that can play a pretty crucial role in responsible borrowing is our credit score. Each of us has one, and they’re something tracked by the major credit bureaus around the world. It’s important to be aware of our scores so that we can react to them accordingly.
You see, depending on your credit score, you could end up with a lower or higher chance of being approved for a loan in the first place. Being armed with this information ahead of time is quite helpful, naturally, especially when we consider that our credit scores can also impact our interest rates.
We highlight the credit score bit because as far as responsible borrowing is concerned, there are actually some loans that are designed to help us build our credit scores. You can find them at a lot of lenders and financial institutions so long as you know what to look for. Don’t be afraid to ask your lender about them as well if that’s something that could benefit you.
Why Loans?
All of this really raises an important question: what’s the significant deal with loans in the first place?Why are we covering them so extensively? There are quite a few compelling reasons for this, as you can well imagine.
For one thing, it’s not hard to see that almost all big purchases these days are contingent on being able to take out loans to pay for them. Some obvious examples of this are mortgages for homes and auto loans for vehicles. Without mortgages and auto loans, a lot of folks wouldn’t be able to buy those near-necessities.
That’s why it can be so critical to educate ourselves about loans and what it means to be a borrower. Obviously, there is a fair amount of access to this content online, but not all of it is quality. For instance, there may be some sites that encourage you to apply for loans even if you have no income.
In truth, if you don’t have any income at all right now, then it’s probably best not to try to borrow. However, remember that this does not apply if you’re someone who has a freelance position or is self-employed. While you may fill out taxes differently, you do still have income that can help you to pay back what you’ve borrowed.
This is just another reason why we should do our best to educate ourselves if we do intend to borrow money, no matter what financial institution that we’re working with. Do some research not just on the process, but also on the different rates that various lenders offer. This can help you find the best deal possible.
What’s Worth Borrowing For?
The last thing that we’d like to cover is this: are there some things that are more worthwhile borrowing compared to others? Obviously, the answer to this is “yes,” but a lot of it will really depend on an individual level. Some folks would find that it’s totally worth getting a loan to pay for a wedding, for example, while others would balk at the very notion.
It will be up to you to decide what you think is a good thing to borrow for versus what isn’t. That way, you can go into the process of knowing exactly why you’re going to take out a loan without any wiggle room or potential for a disaster because you spend the money on something different. That’s not exactly something that happens often, but it’s not totally impossible.
Although it can be a bit difficult to make these decisions, once you’ve decided that it’s worth it for you, then you can initiate the process of submitting your applications. Once you do this, make sure you have your own documentation prepared. If you have an alternative source of income like freelancing or self-employment, that part may be a bit more complex.
Generally speaking, though, there hopefully shouldn’t be any significant hiccups along the way. As long as you have a stable income and you know that you can comfortably make your repayments on time, there’s typically no reason not to consider taking out a loan – the most substantial barrier is usually financial stability, after all.
