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What is a private loan – an unsecured loan?

What is a private loan – an unsecured loan?

A private loan is an unsecured loan. The interest rate is therefore generally higher than for loans where the lender has a security for the loan.

You take out a private loan as a private person. The type of loan is also usually called a blank loan and is characterized by the bank or lender not receiving any security for the loan. Therefore, these loans are more expensive than, for example, mortgages that were home as collateral.

Under the right circumstances – for example, that the interest that the company pays is reasonable and that the money is really needed in the company – you can use your private money and lend it to your own company. Also, do not forget to write a reverse, ie a promissory note.

Also, keep in mind that what you lend should be money that you can manage for a long time, even if the company goes bankrupt!

As a private individual, you cannot borrow from your own limited company.

What is the difference between a mortgage and a private loan?

When you apply for a private loan, you apply for an unsecured loan. It can be about an application of SEK 10,000 up to several hundred thousand kronor, which means that it can be about a larger amount of money that you borrow without any security. A mortgage, on the other hand, is a loan that you take out to finance a home purchase, where the home then becomes the security for the loan. 

Why is the interest rate lower for mortgages than for private loans? 

Since a private loan is a loan where the bank or lender does not require security (a so-called unsecured loan), the interest rate will be higher for that loan than for a home loan where the bank receives security in the home. The mortgage means a lower risk for the bank or lender, which means that you can be offered a lower interest rate. If you are unable to pay off your loan, the bank may require you to sell the home. 

An advantage of taking out a private loan or unsecured loan is that you use the money for exactly what you want. Maybe you should renovate your home and need a renovation loan or car loan or similar. It is quick to apply for a private loan and applications are processed quickly, which means that you can quickly find out how much you can borrow. With these things in mind, it is perhaps not so strange that the interest rate for such a loan will be higher than for a mortgage, for example, given that the risk for the lender, in this case, will be higher. 

Why take out a personal loan instead of a mortgage?

A mortgage can account for a maximum of 85% of the value of the home (a so-called mortgage), the remaining 15% must be entered by the buyer with 15% as a cash contribution. The bank thus has large security for its loan and can thus give a lower interest rate. Many people choose to see if they have room to borrow more on the home and thus increase the mortgage when they need a kitchen loan or to arrange something else at home in the home as it is often a favorable loan in terms of interest rates. But if the borrower does not have that space in the home loan, a private loan is usually a good alternative.  

Can I take out an unsecured loan to buy a home?   

It is cheaper to apply for a home loan when buying a home. The loan amount for a home purchase often means that it is a large amount and then it is important that you get as favorable an interest rate as possible. The interest rate will be lower when you take out a mortgage where your home is collateral for the loan. What you can do is that if you do not have the cash contribution for the down payment, apply for a down payment loan, some do so even if they have money for the down payment and repay that loan directly in connection with access.  

Can I compare home loans through Lendo? 

At present, it is not possible to compare home loans with us at Lendo. We are Sweden’s largest comparison service for private and corporate loans. By comparing loans with us, you can get loan offers from up to 40 loan offers and ensure that you get the best possible loans and terms in terms of your conditions. You apply in one minute with minimal impact on your credit rating as we only take a single credit report via UC which our affiliated banks and lenders may share. You usually get an answer within a few minutes and your possible loan promises are valid for 30 days, which means that you can compare in peace and quiet. You do not commit to anything by applying and it is free. 

Eleena Wills
Hi, I’m Eleena Wills. Being a writer and blogger, I strive to provide informative and valuable articles to people. With quality, constructive, and well-researched articles, one can make informed choices. I cover a wide range of topics, from home improvement to hair styling and automotive.
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