It can be difficult to see what it really costs to borrow money. This is due, among other things, to a complicated interest calculation. We have therefore incorporated a loan calculator on all our pages with the intention of making our loans as transparent as possible. The loan calculator allows you to freely adjust the loan amount and maturity and thus gain insight into how the two variables are mutually dependent. Therefore, there is not a single price on what it costs to borrow.
How is the interest rate calculated?
Usually, interest calculation is given by the following formula:Kn K0 = (1 + r) n
However, it is important to point out that this interest rate formula makes the best sense for loans that extend beyond one year. The dates are typically annual. Next, a premise for this formula is the interest rate, which is not imposed on our loans.
The interest on our loan, if the amount borrowed exceeds USD 1,000, is, on the other hand, calculated as a flat rate of 20% for 30-day loans. If this is put into perspective, you will thus pay about USD 6.67 a day to borrow USD 1,000 for 30 days.
The interest cost of your loan amount varies by amount and maturity. A simplified illustration of the idea behind is exemplified below by:
Maturity: 30 days
If you want other combinations of loan amount and maturity, you can in a few seconds get an overview of your desired loan by using our loan calculator.
What does it cost to borrow from Blu Money?
Most types of loans are typically made up of three elements; principal and interest and foundation costs. The principal is the amount you borrow, while the interest is the price you pay to borrow the principal. In addition, some loan providers, such as the bank, impose foundation costs. They typically come in the form of handling fees.
Our credit has no foundation costs, which is mainly due to the entire application process going online. Therefore, there is no need for the so-called handling fee as seen in banks.
If you are borrowing for the first time, we can also offer you a loan with a 50% discount. In other words, you can borrow USD 6,000 at half price for up to 30 days.
Subsequent loans are subject to interest. The amount of interest expense is calculated based on maturity and loan amount, which is why the obvious solution is to incentivize you in the loan calculator on your profile when you apply again.
You have every opportunity to reduce the interest cost if you had the money in hand earlier than expected. When you deposit, you first cover the outstanding interest costs. But all in addition, repay on your loan amount. This way, you save interest costs in relation to your starting point, because your principal becomes smaller and interest rates are reduced.
Conversely, you may also choose to borrow more on your credit if you have not utilized the full credit amount for which you have been approved. If you borrow more, the interest rate will also be higher.
In other words, there is no clear answer to the costs associated with a credit with us. The price thus depends largely on your borrowing needs and whether you have borrowed before. What we can say for sure is that our loan offer offers you a great deal of freedom and flexibility to plan your finances, for example during pressured periods. It creates tranquility and helps you to keep an overview.
How much can you borrow from Blu Money?
Your maximum loan amount for a short-term loan with us depends on whether you have borrowed before and how we have rated you when you apply. Generally, your loan amount increases continuously, the more times you borrow from us, but as a repeat customer you can always apply for up to USD 12,000.
However, it does not change that we offer you a 50% discount on the interest rate for up to 30 days as a new customer and that the interest rate is 20% for the subsequent periods of 30 days and as a repeat customer. In those cases, the interest attribution will be calculated as follows:10,000 * 0.20 = 2,000 kr.
It therefore costs USD 2,000 to borrow USD 10,000 per loan. 30 days with us. If you pay back on time, the total benefit after 30 days will be as follows:10,000 + 2,000 = 12,000 usd.
Where 10,000 constitutes the principal, which is constant, the USD 2,000 constitutes the interest attributable to a maturity of 30 days. As I said, the interest cost is not constant as it depends on the maturity of your credit. For example, if you repay after 20 days instead, the interest cost will be reduced to USD 1,330, thereby saving USD 670 on the total benefit simply by repaying your credit 10 days before.
Identify your loan needs and save money
One of the most essential things in the process of opting for a loan is to identify what you are actually borrowing money for. There is a perfectly logical explanation behind this. It doesn’t make sense to borrow USD 4,000 – just because you can – if you really only need USD 2,500.
What can potentially happen in this situation is that you pay off what you originally borrowed money for and consider the remaining USD 1,500 as money for pleasure. This way you have actually spent more money than you had available, and it now requires an extra effort from you to repay rather than if you had only borrowed the USD 2,500 to start with.
The same premise applies when it comes to the maturity of your credit. The difference, however, is that you can repay at any time while the principal is fixed. However, you give yourself a far better starting point if you have estimated in advance how much time you will need to repay your credit. A long maturity gives you plenty of time to raise the money, which is a good thing if you actually need it.
If you borrow in the middle of the month and know that you have the money on the 1st, there is no need to choose a payment date of 30 days and keep the money for all 30 days. It is not there because you know in advance that it will only take you 15 days before you have the option to repay. The risk here is that you take it easy because you have plenty of time until the end of the term, which is why you probably pay more in interest than is necessary.
In terms of cost, you thus come a long way in making a real assessment of your loan needs before you borrow.
Thus, there are many factors that play a role in the cost of borrowing. Therefore, as mentioned, there is no clear answer to what it costs to borrow. If you have any doubts, you are welcome to contact our customer service every weekday from 08.00 – 16.00 on phone 78 77 20 68, log on to our chat on the website or write to us at info @ Blu Money.
Credit amount 6000, – Maturity 12 months Total credit costs. 7908, – Mdl. maximum payment 1716, – Total repayment 13908, – ÅOP 816.67% Debt rate / annual fixed: 243.3%. 14 days cancellation right on the credit agreement. Age 20+.