Taking sms loans is an easy way to get money into your account quickly, but at the same time it can feel a little uneasy. The rumors that abound about rogue sms loans are many and thus it can feel difficult to know if it is really possible to trust the credit company that gives the sms loan. Probably there is some sort of rogue player among the credit companies, but you can feel confident that all companies that give credit have obligations to their customers. In fact, they have a whole bunch of rules to follow for sms loans and in addition they need permission from Finansinspektionen to run their business and thus they are also reviewed by Finansinspektionen. Here is an easier explanation of some of these rules.
Consumer Credit Act
For SMS loans, the Consumer Credit Act applies. You may be wondering now ” what is a sms loan? “Or” what is the definition of a sms loan? “, When the term is widely used. It is no stupid question to ask, but very simply explained, sms loans are all types of small loans where you can get the money quickly, where the cost of borrowing is relatively high and where you have to repay the loan within a relatively short period of time. However, considering the Consumer Credit Act, it does not matter if you take a sms loan, a mortgage loan or any other loan – all credit institutions must adhere to the Consumer Credit Act.
Good credit practice
One of the more important parts to bring with you from the Consumer Act is that the lender must comply with good credit practice. Adhering to good credit practice means the following:
- That the lender carefully takes care of the lender’s interests.
- That the lender answers any questions the lender may have.
- That credit check is done.
- That effective interest rates are reported.
It is easy to believe that a credit check is not done on sms loans or that credit check is at least not done when the lender claims that they offer sms loans without UC. However, this is a misconception and is probably because borrowers believe that UC is the same as the credit check, even though UC is in fact only one of the companies that offer credit information. The truth is that credit institutions must do a credit check because they otherwise violate the Consumer Credit Act . There may be some companies that fail to adhere to these credit check rules but then as a borrower you should quickly put your ears to it, as they indicate that the lender does not have clean flour in the bag.
The fact that a credit check must be done by law is that the lender should investigate whether their potential customers are deeply indebted and it is as much about protecting the lender himself as it is about protecting the lender.
Effective interest rate
According to the Consumer Credit Act, the effective interest rate (often abbreviated to the effective interest rate) must be stated and this must be done in two places:
- It must be included in the loan application.
- It must be included in the loan agreement.
That the effective interest rate is stated is a way for the borrower to know what the entire loan costs on an annual basis. The loan’s fees are calculated using the loan’s interest rate and thus the interest rate is obtained for the effective interest rate. Previously, it was common for borrowers of sms loans to take loans without having any real idea what the loan would cost them and for that reason it is that rules on effective interest rates have arisen. Since you already know what the effective interest rate will be at the loan application, you can more easily compare what different sms loans will cost and you have an honest chance of establishing a realistic budget for the repayment of your loan.
Withdrawal rights not only apply to purchases of goods and the like, but there are also rules regarding the right of withdrawal when you take out an SMS loan, which usually applies for two weeks from the time the loan was granted. However, with just a sms loan, there is a small catch and it has to do with these being paid out as quickly as they do. If you cancel your loan, you still have to pay the interest for the time you have the borrowed money in your possession. This means that the rules for sms loans mean that you almost always have to pay a certain amount for the loan, even if you regret it and immediately repay the money. It is therefore not wrong to think once more about whether you really need a loan before applying for it.