Why borrow money as a student?
There are many different reasons why Danish students want to borrow money. Most often, the Danish youth are looking for big cities to study where it is more expensive to live for rent. This can be one of the reasons why students want to borrow money – just to finance everyday life.
Furthermore, there may be other reasons for the desire to borrow money, such as if you want to buy a new bike or a new car – or want to invest in an apartment.
The various loan options can be difficult to find, why we include a guide to the various loans that students can take – and an example of the situation in which the various loans are typically taken up. Danish students have good opportunities to borrow money, so one should not feel limited in relation to their low income in the form of SU.
When you are studying, you have the opportunity to supplement your SU in the form of loans at SU – also called an SU loan. You can only raise SU loans if you receive SU. That is, if you have opted out of SU in certain months, you do not have the opportunity to receive SU loans during this period.
An SU loan is a cheap loan, as the interest rate is low, so many students use it extensively. It is different how much you can borrow depending on the situation you are in. Most people use ordinary SU loans, which are currently at DKK 3116 per loan. month. However, you have the option of additional supplementary SU loans for dependents, if this is exactly the case.
If you go on a higher education, and if you have no more SU clips left, you have the opportunity to take out a final loan which amounts to a much higher amount than the normal rate for SU loans.
Furthermore, you can take out loans in connection with study abroad, parental dependence (if the SU depends on the parents’ income), and more.
An SU loan is primarily taken for a student to gain greater room for maneuver in everyday life and thereby more financial freedom.
Mortgages as students
The above example of SU loans is usually included in connection with a continuing desire for more money in everyday life. If this is not the case, one can instead make use of quick loans. This kind of loan is usually taken up if you need money right now and here and have no problem paying back the money quickly.
Unlike the above-mentioned SU loans with low interest rates, quick loans have high interest rates. Therefore, it is recommended that you only record quick loans if you have the money to repay the amount within a short time.
This can be, for example, if you are going to spend money right away for, for example, unforeseen expenses, a new bike or something else, which you can well achieve, however, for future pay bills.
Bank loans as students
In addition to the two examples above, one also has the option of raising bank loans, including consumer loans. Unlike an SU loan, you receive the entire loan at once rather than smaller amounts each month. Unlike quick loans, with a loan in the bank, you can borrow much more money at one time with a much longer maturity.
A consumer loan is typically included in connection with a larger one-time cost, such as for example when buying a new car.
Mortgage as a student
The above section brings an example to include bank loans, more specifically a consumer loan. Another popular bank loan is a home loan, either in connection with the purchase of owner-occupied or cooperative housing, or simply as a deposit to a rental home. The latter is a relatively small amount, so this is easier to record than a home loan for the purchase of housing.
When you are a student, it is a good idea to apply for a mortgage loan with a grace period, which means that you first withdraw on the loan itself after a certain period, for example 5 years. In this way one can now complete his education and enter the labor market before the bank requires more money from one.
Furthermore, special rules apply in relation to loans for the purchase of owner-occupied dwellings and loans for the purchase of cooperative housing, which one can inquire more closely with his bank. One of the advantages of borrowing for owner-occupied housing, rather than cooperative housing, is that you can take out mortgage loans, which is not possible when buying a cooperative.
Combination of SU loans and bank loans
As mentioned earlier, an SU loan is a good loan, as the interest rate is low. Therefore, one can advantageously record SU loans over a longer period, not to use them, but only to save them up. This gives you the opportunity to raise a higher loan in the bank, possibly in connection with mortgages, which just require that you have 5% of the purchase price saved up.
Furthermore, SU loans are calculated as income when examining loan possibilities, which is why this also increases the possibility of borrowing more money.
It can therefore be a good idea to raise SU loans with the aim of saving up and using them in connection with home purchases – and hence home loans.
General loans for students: how much money can you borrow as a student?
If one goes with the idea of borrowing money, it is relevant how much it is possible to borrow. It varies from loan to loan, but also from person to person depending on the situation you are in.
When admitting a SU loan, you must document that you are enrolled in an education. The SU loan is dependent on receiving SU, which is why you cannot borrow if you opt out of the SU.
The rate for SU loans is normally DKK 3116, but you can still apply for different supplements. In addition, one must be aware of how much one earns from a possible student job, as one can risk having to repay both SU and SU loans. Therefore, the possibility of this type of loan depends precisely on a given situation.
For quick loans, it is usually small amounts that you have the opportunity to borrow. It is loans that you can record right away if you lack money right now and here. You do not need to provide any documentation for your own finances, income and expenses. Therefore, the possibility of the amount is independent of the situation, so one can take out a loan of exactly the amount you want – within the limits of the quick loan.
A bank loan is usually the loan that must be the most documented in relation to. How much money you can borrow varies from situation to situation. Among other things, the bank looks at income in the form of SU, SU loans and student jobs, and which fixed expenses each month has. Therefore, it is a good idea to make budget before you meet with the bank, so you can show that you can comply with fixed items.
The bank also examines whether other loans are already in place, as a new loan can ideally be placed with the old loan. If a previous loan is taken up with another creditor, the possibilities for a new loan may be narrowed down as the old loan must be repaid first.
Furthermore, age also plays into loan options, of which banks are more likely to borrow money for a student aged 25 than a student of 18 years.
Some loans depend a lot on situation – income, fixed expenses, and more – of which other loans, often smaller amounts, can be admitted without documentation of finances. Depending on how much money you want to borrow, you can examine the different loan options that best suit a given situation.
Good advice for borrowing money
Create a budget
A good advice in connection with borrowing money is to lay budget. First of all, it gives a good overview of income and expenses, which is an advantage if you want to borrow money. If one can show a budget that has been respected for the bank, this will increase the possibilities for borrowing money, as one appears more stable in connection with repayment.
In this budget, it is a good idea to create a savings for unforeseen expenses. Many Danes borrow money in connection with covering unforeseen expenses, which can be avoided by putting money aside for this. This also shows responsibility, which can further be an advantage in connection with borrowing money from the bank.
Obtain offers from different providers
One should obtain offers from different loan providers and not just be tempted by the first loan offer you receive. For example, it may be worth switching banks if another bank is willing to borrow more money or give a lower interest rate on a loan. Furthermore, one can try to negotiate interest on his loan, so that he can secure himself the cheapest possible loan.
It is important that you familiarize yourself with a loan’s interest and maturity. You have to be realistic when you take out a loan in relation to how much you can pay back a month. If you set the performance too high because you want to have the loan paid as soon as possible, it can have major consequences if you cannot comply with the payments. You should know the consequences for not complying with agreed payments, as this can lead to a vicious circle that you cannot pay off.
It is important that you do good research before you borrow – and that you do not borrow more than you can pay back.