Loan in own or foreign currency – what is better?

Due to the globalization, new forms of financial services are emerging on the market every day. One of a quite new loan is an option available in the other currency. This variant is possible only in some countries, especially outside the Euro zone. In the article we will try to find the answer is it a convenient way to borrow money.

It is really easy to find at least a couple of disadvantages when thinking about the loans in the foreign currency, in many countries those services have a bad reputation. The first problem with those kinds of services concerns unsteady total cost of the credit. Since it is a loan in another currency it depends on its exchange rate. Simply speaking, if the rate grows, the costs will be higher as well. Awareness, that your commitments can grow each year, no matter if you pay the installments or not, can be really scary. Another downside of the loans in the foreign currency is the fact that the banks are generally exchanging money on their own rate. It is almost always worse for a client comparing specialized exchange office. The next problem with such a credit is next expense directly connected with so called “spread”. Spread is a difference between the higher and lower rate of exchange. During repayment a borrower has an option to convert the credit to the other currency. However, such options in most cases are very expensive for a client and profitable for a bank. Mentioned drawbacks are significant, nobody will argue about that, but for every problem there is a solution at

Loans problems in Sweden

After knowing about the problems associated with the discussed kind of credit, hardly anyone will think, that it is a good way to get the money. Still, there are some special situations when the loans can be utilized with success. Since there have been severe problems with the costs of the foreign currency credits, special financial mechanisms have been developed. At the moment a customer can apply for conversion to other currency if the exchange rate is critically changing or on other conditions. It is crucial to carefully examine the details of a contract. Then you will be sure how you can react on modifications of the exchange rate. Sure, it is expensive, but if you have a good instinct for changes on the currency market and are able to foreseen it, that feature can be beneficial for you. Next advantage is the possibility to pay the installments directly with the foreign currency. If you can afford some time for trips around exchange offices and banks, the amount of money to pay each month can be reasonably lower. Another benefit of the foreign currency loans is a shorter and easier way to get it. Since it is a more hazardous financial service, the requirements are lower than in case of a standard credit läs mer & ansök hos LejonFinans.

Summarizing, the foreign currency loan

Summarizing, the foreign currency loans are very risky, but a very clever consumer can benefit even from such financial services. If you are sure of your skills, you are very good at anticipating changes on the financial market, you should try and apply for such a credit. The straight way to a success is to keep in mind the clues mentioned in the text.