Wednesday , May 18 2022

consumer , LOAN – The new rules for consumer loans must not affect those who take action to recover from the debt spiral


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The Norwegians now have 115 billion dollars in consumer debt, according to Finansinspektionen.

And it's getting more and more. We must return to the 2008 financial crisis to find a higher rate of growth. Last year growth in this type of loan was 11.4 percent. The year before, growth was 15 percent.

Credit cards, consumer loans and other loan loans may be useful to some, but too many also mean a less sustainable private economy that it can be difficult to control.

Several now warn that the escalating debt burden poses a risk to the Norwegian economy. The strong growth in consumer loans has also made the government worried. Therefore, the government now wants to introduce a separate regulation that can regulate who can increase consumer debt.

Here are the changes:

Among the proposals from Finansinspektionen held in consultation until 6 December 2018 are:

Loans may not be granted if the customer does not have sufficient funds to cover normal living expenses after an interest rate increase of five percentage points on the customer's total debt.

Loans may not be granted if aggregated debt accounts for more than five times annual income.

No loan shall be granted with maturity over five years.

In contrast to the question of mortgage loans, mortgage loans may not be exempted from the requirements. When the debt register enters 2019, it is also a requirement that this should be taken into account when assessing the individual applicants.

Reasonable rules that prevent unfortunate debt growth

The regulation sets forth precious requirements that make it impossible for many who can not be granted consumer loans. It is good for both individuals, families and society.

Although consumer debt accounts for a small part of the total debt in the Nordic countries, the strong growth in this type of loan is due to slow down.

It is not without reason that Finansinspektionen says they are worried that Norwegians raise high-yield consumer loans that they can not serve.

Has no impact on those who want to clean up their own finances

Customers with high short-term debt in the form of consumer loans and several credit cards often have very high interest expenses. For many of these, it may be advisable to collect the loans in one place, if it provides lower interest rates and the customer will be able to handle the debt.

Finanstilsynet takes into account that it will be possible to refinance the debt, but their proposal means that the maximum maturity of a refinanced loan should not have a maturity that is "longer than the remaining maturity of the existing long-term loan".

This is unfortunate. Many of the customers who need and want to clear their own finances should be given the opportunity to pay their debts with a maturity which means they can actually repay the debt. The alternative is that these people lose the opportunity to correct the economy because the loan terms are too difficult to meet.

The new rules for consumer loans are likely to prevent many Norwegians from falling into debt spirals, but it is important that the rules do not stand in the way of those who want to get out of it.

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