The fact that loans have different interest rates comes as no surprise to many. However, you may be surprised to find that the same loan provider may have different interest rates on the same loan.

This is because some service providers use so-called risk or customer profile pricing. In this case, the loan interest rate is somewhat dependent on what kind of customer is applying for the loan.

Our comparison shows that consumer interest rates may have a major counterpart between the minimum and maximum rates. So if you are considering taking out a loan, you might also want to consider your own credit rating.

How is the loan interest determined?

Usually the loan is offered at a lower rate if the customer has a good customer profile. This may mean, for example, that the customer has a good income in relation to the amount of debt they are applying for, that they have conscientiously repaid their loan or that they have no entry in the credit register.

Each lender has different ways of scoring their customers. Generally, lenders do not disclose their exact scoring process, but you will not know your interest until you get an initial loan offer. This again requires applying for a loan. Elsewhere in the world, Facebook friends, for example, can influence whether you get a loan or not.

The most interesting examples of interest rate pricing in Finland are probably peer-to-peer loans. For example, in Fellow Finance, the interest rate on your loan is determined not only by your credit rating but also by the offers of the lenders.

Fluctuations in consumer credit interest rates

We went through the interest rates on consumer loans offered in Finland. Some lenders used a fixed rate, ie the same rate for all customers, regardless of their customer profile. Such lenders were, for example, My Lender and Santander. It is noteworthy in Santander that they provide consumer credit up to EUR 50,000 and the lowest interest rate, the highest loan amount.

However, most lenders had variable interest rates. The table below allows you to compare the interest rates of different lenders.

* When the loan amount exceeds 40,000 euros.

The current annual interest rate and total cost are the most important

Comparing interest rates and understanding that many lenders lend to different borrowers on different terms (at different rates) is important to the consumer. Still, it can be said that it is even more important to realize that the APR and the total cost are the most useful indicators.

They allow you to compare loans in a consistent and efficient way. Loans may have low interest rates, but many different payments, such as withdrawal fees or monthly and opening fees. These are all clear of the total cost and the annual percentage rate of charge.

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