Granting of consumer credit in Finland requires registration in the Southern Finland Regional Administrative Register or, alternatively, a license from the Financial Supervisory Authority.
All in all, over 300 operators are listed in the registers of the Financial Supervisory Authority and the Regional Administration Office, most of them granting consumer credit. However, the number of operators is greatly increased by those belonging to the same banking group, who appear to the consumer under.
Consumer Credit Glossary
There are different concepts related to consumer credit and the most important are listed below.
Amount of consumer credit
The amount of consumer credit is probably the most important concept when it comes to consumer credit. The loan amount represents the amount of money that the credit lender makes available to the customer.
Payment term for consumer credit
The term of payment of a consumer loan indicates the length of time the consumer credit has been granted to the customer. In other words, this is the time within which the consumer credit is repaid to the lender.
Interest rate on consumer credit
The lender charges interest on the consumer credit. The interest is calculated on the loan amount at the customer’s disposal and this constitutes the cost of the money borrowed. In most cases, the interest rate at the beginning of the loan period is higher in euro terms than at the end. This is because the interest rate on a consumer credit is calculated on the amount of loan money available to the customer, which naturally decreases as the loan repayments are made.
Opening or withdrawal commission on consumer credit
Some consumer credit providers charge an opening or drawdown fee at the time the consumer credit is granted. This is to cover the costs of granting and processing credit. Depending on the credit agreement, the opening or withdrawal fee may be capitalized. If this reward is capitalized, the customer will also pay interest on the capitalized reward under the credit agreement.
Invoicing or account management fee
Some consumer credit providers charge a monthly billing or account management fee. This fee is typically a few euros and may also vary depending on whether the customer has electronic or paper invoicing.
The annual percentage rate
The effective annual percentage rate of charge is a calculated indicator that facilitates the comparison of consumer loans. The annual percentage rate of charge covers all costs related to the credit, such as the interest rate and any charges denominated in euro.
Parties to a consumer credit agreement
A consumer credit agreement is always concluded between the borrower and the lender. Consumer credit can also be granted with a co-applicant. In this case, both the main applicant and the parallel applicant are jointly liable for the repayment of the consumer credit.
Repayment of consumer credit
Consumer credit is a commitment, just like any other purchased product or service. Therefore, the consumer credit must be repaid in accordance with the agreed payment schedule.
In the event of potential payment difficulties, lenders are in most cases willing to restructure the loan repayment period or grant payment or repayment-free months. It is also in the interest of the consumer credit lender to repay the credit. Often, however, in order to make any payment arrangements, the lender requires that these be agreed in advance.