Your income and ability to repay the loan
Each lender in Sweden will work out, according to their formula, whether you will be able to repay the loan. They automatically take into account living expenses and will not allow the repayments to rise above a certain level of your income.
If the repayments (based on current interest rates) are over a certain percentage of your take home pay, you will be refused a loan automatically. Most lenders will factor in an increase of interest rates to provide a buffer as well. Use the personal loan calculator to estimate what the level of repayments would be for your situation.
If you currently have other loans and the repayments are a major portion of your income, then this could also be a problem.
Lenders in Sweden are looking for stability in employment. Someone who changes jobs a lot or changes industries can give the impression of lacking reliability.
Most lenders will not lend to someone still in their probation period.
Credit Worthiness / Credit History
Almost everyone will have a Credit File and lenders will check it before approving your loan.
Your credit file contains personal information and details of your credit history.
These include details of:
- Previous loan applications made over the last 5 years.
- Current loans.
- Overdue accounts, also known as defaults.
- Current and previous employers.
Some lenders will refuse your application no matter how small an overdue account is. Overdue phone accounts, long forgotten because you moved, can stop you getting a loan.
Lenders record into your credit file if you make a loan application with them. If you make multiple applications, this can be seen as an indicator of financial stress. You should keep loan applications to a minimum and not apply to each and every lender you find.
A number of lenders in Sweden will enquire as to your residential situation going back 5 years or more. Moving around a lot is another potential indicator of unreliability or instability.
What to do if your loan application has been rejected:
Fix your credit file
It’s always a good idea to check your credit file prior to making a loan application. It is free and the small amount of time it takes can sometimes save your application. Entries should be checked for accuracy and defaults should be rectified.
If you have changed employer and are still within the probation period it would be wise to consider waiting until you are no longer on probation as some lenders will not consider your application until you are considered a fulltime employee.
It could also give you more time to:
- Build up your savings.
- Create a savings track record to show the lender.
- Give you a larger deposit.
- Lower the amount you need to borrow.
- Consider a secured personal loan
If you are applying for a personal loan to purchase a new car, consider getting a secured loan. The difference between an unsecured and secured loan is the lender takes control of the car until the loan is fully paid out as you can learn from the Swedish best financial portal Blancolån24. Another bonus for getting a secured loan is the interest rate will probably be lower.