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Refinancing can give you better finances

ECONOMY: Do you struggle with high expenses on consumer loans, credit cards and installment purchases? If so, you are one of many.


Although the trend is declining in the country, Norwegians still have over 150 billion in consumer debt. Much of this is also defaulted, which means debt collection cases, payment remarks and poor night's sleep.

Consumer debt in Norway

After the so-called Debt Register came into place in 2019, it has become easier to keep track of consumer debt in the population. According to the latest figures from Norwegian Debt Information (1 April 2021), debt from consumer loans and credits has fallen by almost NOK 7 billion in the last three months alone. The figures fluctuate slightly due to credit card use, but the trend is downward, which is positive both for consumers with this type of debt and for the Norwegian economy.

Refinancing to cut costs

Some of the decline is most likely due to the need to borrow when there is a pandemic. We travel less, we postpone the renovation, and have fewer activities at all that require financing.

At the same time, there are probably many who have used the last year to reduce the expenses they have from loans and credits. This means in most cases that they refinance themselves at lower interest costs, he writes DNB on their websites. Figures from the banks also indicate that this is the case. Many report that a larger proportion of the loans they provide now go to pay off other debts.

Having many creditors is most expensive

Those who save the most money on refinancing are usually those who have more consumer loans and debt to credit card companies. In general, interest rates are highest when debt is low. If you then have several small loans, it will normally pay heavily to collect this in a larger loan. The large loans are usually also significantly cheaper than credit cards and installment purchases.

This is an approximate estimate of what the various loans and credits cost:

  • Mortgage loans (Mortgages) – Effective interest rates between 2% and 4%.
  • Unsecured loans (up to NOK 500) – Effective interest rates between 000% and 8%.
  • Unsecured loans (less than NOK 75) – Effective interest rates between 000% and 12%.
  • Credit cards – Effective interest rates between 20% and 35%.
  • Installment purchases – Effective interest rates between 20% and 40%.

Loan example: Effective interest rate 9,64%. 100.000, -, over 5 years. Cost 25.246. Total: 125.246.

In an imaginary case, a person who, for example, owes money to a couple of credit card companies, has a couple of installment purchases, and perhaps a couple of small loans on top, will reduce the number of creditors from six to only one with a refinancing. At the same time, the person will be able to expect that the interest rates will then be reduced from between 20% and 40%, to somewhere between 8% and 15% if he or she used an unsecured loan for the refinancing.

Get out of debt faster

Although the total amount is of course not reduced immediately, the lower costs will enable one to pay larger installments. Larger installments mean that the interest-bearing debt runs over a shorter period of time, and thus costs can be further reduced.

The rules for all loans that do not have a fixed interest rate make it possible to pay larger installments when the borrower himself wants, without incurring any additional fee costs or the like. The question is whether you have enough discipline, motivation and income.

Motivating and easier

The biggest motivating factor is usually to see that costs are reduced. Most people also find it easier to be able to deal with one creditor rather than several. This in turn reduces the risk of reminders and defaults, as well as increased costs and problems.

There is also an important psychological factor at play, namely the feeling of mastery many people get when they take control of debt that may have become a major problem. People who have several loans and credits are often afraid to open the mailbox and inbox, because there may be reminders and demands.

Some tips to find the cheapest solution

A refinancing loan can be only a few hours away from becoming a reality, but it still pays to spend some time finding the best option. This has to do with both the choice of type of loan and the choice of bank.

If you own your own home and have a mortgage, an extension of this loan will be preferable. The alternative is an unsecured loan. You can find these in several dozen banks in Norway, but not all have equally good conditions. If you want to find the cheapest solution, you must obtain offers from as many of the players as possible. On Refinansiere.net you will find an overview of several of the niche banks on the market. Only then do you have a viable basis for comparison.

Here is a to-do list:

  • Secured loan if you can pledge.
  • Alternatively, take out a loan for refinancing without collateral.
  • Get an overview of banks that offer the loan you need to get your debt refinanced.
  • Collect offers from as many of the banks as possible.
  • Prioritize the most expensive credits and loans if you are not allowed to borrow everything you need.
  • Calculate what you can do in monthly installments and choose as short a repayment period as possible.
  • Remember that you can increase the rate of repayment later if you get better liquidity.

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