Getting a Loan in Norway and USA: A Side-by-Side Comparison


The loan market in Norway and the USA is quite different. Suppose you’re planning to relocate or move your business to either country. In that case, it’s essential to understand the loan application processes to make an informed decision about the best place for you to live or do business. Getting a loan in Norway and USA – here’s a side-by-side comparison.

In Norway, applying for a personal or payday loan differs significantly from how things work in the United States. It’s important to understand these differences before applying for a loan because they could impact how long it takes you to get approved and what loan options are available to you as a foreigner. So let’s discover the lending and borrowing differences between these two countries.

Loan Application Process

Before you start your loan application process, you must know what’s required by law. For example, in Norway, the minimum age you can get a loan is between 18 and 25, depending on the lender and loan amount you borrow. Personal loans are available only to foreigners living in Norway for three years.

Here are the documents you need to bring to apply for a payday loan in Norway:

  • Proof of income (pay stubs, tax returns, or bank statements, the minimum income is $20,000 per year)
  • Proof of residence (utility bill)
  • Proof of identification (driver’s license or passport)
  • Proof of creditworthiness (credit report)

In the United States, there are almost the same eligibility criteria:

  • Age at least 18 years old
  • The minimum income per month: $1,000;
  • Permanent residence or US citizenship;
  • Active bank account;
  • Valid email address and phone number.

Regarding the further application steps, they are the same. You submit the loan request form and wait for the approval decision. If approved, you’ll sign the loan agreement.

Related: The Complete Guide to Moving to Norway

Getting a Loan in Norway and USA: A Side-by-Side Comparison
With the right loan, you can get the funds you need without taking out a mortgage or other long-term loan.

Personal Loan Process: Comparison

Personal loans are a great way to get the funds you need when you need them. With the right loan, you can get the funds you need without taking out a mortgage or other long-term loan.

However, you should be aware of some differences between personal loan processes in Norway and America as you decide where to get your loan.

We’ve got a short list of differences that must be considered when choosing between borrowing money in Norway and the US:

  • The US application process is more straightforward than Norway’s because most online lenders don’t check your credit score through major credit bureaus.
  • Norway’s annual percentage rates (8.38% – 38.86%) are higher than in America (6% – 35.99%).
  • The repayment schedules for long-term personal loans are the same (from 12 months to 60 months).
  • You can apply for a personal loan in person at any bank or savings bank branch throughout Norway and the United States.
  • The maximum loan amount in Norway is $500,000; meanwhile, it’s $100,000 in the US.

Related: Common Expenses When Moving to Scandinavia

Getting a Loan in Norway and USA: A Side-by-Side Comparison
In Norway, the most commonly used credit scoring model is the “Grisgrendte” system.

Credit Score Differences

In Norway, the most commonly used credit scoring model is the “Grisgrendte” system. It evaluates the borrower’s creditworthiness based on payment history, outstanding debt, length of credit history, and any defaults or late payments. The credit score ranges from 0 to 100, with a higher score showing a lower risk of default. A credit score between 1 and 20 is considered bad, and figures between 71 and 100 are shown as good credit.

The most widely used credit scoring models in the United States are the FICO Score and VantageScore. FICO Scores range from 300 to 850. Meanwhile, VantageScores range from 300 to 850 as well. The same principle is applied when lending companies calculate the scores. They include payment history, credit utilization, length of credit history, credit mix, and recent inquiries of credit reports. Usually, lenders don’t use your income and employment to calculate your credit rating, but they can consider them during the loan approval process.

Getting a Loan in Norway and USA: A Side-by-Side Comparison
The process typically takes longer for larger loans in both Norway and the US

How Long Does It Take to Get a Loan in the US vs. Norway?

If you ask yourself: how long does it take to get a payday loan, it’s crucial to mention that in the US, you’ll get your loan on the next business day. Meanwhile, depending on the lender’s cut-off times, it may take several days in Norway.

However, the process typically takes longer for larger loans in Norway and the US, such as mortgages or business loans. It can take several weeks or months to complete the necessary paperwork, undergo a credit check, provide documentation, and have the loan approved and funded.

Related: Popular Loan Types in Norway

Loan Options for Foreigners in Norway

The first factor you should know before searching for a loan in Norway, as a foreign citizen, is that you must live here legally and pay taxes from your monthly income. After you figure out your monthly or yearly paycheck and tax payment, check these loan options:

Personal loans: As a foreigner, you may get a personal loan in Norway for significant needs. The Norwegian lenders provide many options to buy a car, go on vacation, or renovate your home. The terms and interest rates are set by both parties and registered in the loan contract.

Mortgage loans: If you plan to buy a house but don’t have enough money, consider mortgage loans in Norway. They are available for legal residents and are provided by mortgage lenders and major Norwegian banks like Handelsbanken Norway.

Student loans: If you’re a student in Norway and need money for tuition and utilities, try student loans. The Norwegian State Educational Loan Fund (Lånekassen) typically offers these loans under specific criteria and repayment terms.

Start-up loans: Foreigners interested in starting a business in Norway may explore start-up loans or entrepreneurial funding programs. These loans are designed to support the establishment and growth of new businesses. Consider that lenders may require a solid business plan and financial projections.

Credit cards and overdraft facilities: If you have a Norwegian bank account, you can access credit cards and other facilities that imply bank accounts. These options allow people to borrow money up to a specific credit limit, with interest charged on the outstanding balance.

Getting a Loan in Norway and USA: A Side-by-Side Comparison – Bottom Line

In conclusion, getting a loan in Norway and the United States is surprisingly similar. They both require you to fill out an application, provide proof that you can pay it back, and have an appraisal done on your property. However, if you’re looking for a loan from a bank or credit union in Norway, be prepared to show them your income statements for the last three years. In the United States, you only need two months’ pay stubs.

Getting a Loan in Norway and USA: A Side-by-Side Comparison
Kerry Vetter

Getting a Loan in Norway and USA: A Side-by-Side Comparison, written dedicatedly for Daily Scandinavian by Kerry Vetter. Kerry is the financial writer and expert of 1F Cash Advance with solid expertise and a strong focus on goal-based wealth management. Her passion for helping people and extensive knowledge of lending and financial sectors makes her a credible authority that you can trust. Kerry has a Master of Science Degree in Finance and is dedicated to giving people useful and practical advice on how to reduce debt, manage money, improve credit scores, and increase wealth.

Feature image (on top): Screendump from YouTube