Are Swedish P2P loans safer than foreign loans?

Is it safer to invest in Swedish K2k loans than foreign ones? “Definitely yes,” says Big Daddy’s credit manager Maine Laok. The reason for this can be traced to Sweden’s long-standing inclination for order and order.

You must not stand by the word. But man’s ability to assess other people’s economic health has, after all, played a rather important role in history.

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However, most attention is usually directed to the inability. Some may feel a little uneasy about the word itself, perhaps as a subtle itch. Other people’s thoughts move emotionally to anonymous window envelopes. But for a limited group of people in the community, credit checks are actually about the very art of assessing a private person’s ability to pay. It is an intellectually rather interesting problem: knowing with certainty whether a person repays a loan or not is impossible. So how do you know with the greatest possible certainty that the person pays back?

On a plane, this can sound pretty trite. Type, check the salary at the Swedish Tax Agency. But then you forget how good we are here in Sweden. At least if you are a credit manager. If you look out into the world instead, it is not obvious that you know so much about a person applying for a loan. You may not know how much the person earns. You may not even know if the person has a job. I talk to Åke Dahlqvist, head of analysis at the credit information company UC, which speaks to it further: The question is if you even know who the person is at all? Without access to identification solutions such as Bank ID, which is not at all a matter of course abroad, two people with the same name at the same address can create enough confusion.

It may not come as a surprise, but this with credit checks is something that we Swedes are good at. So good that if it had been a championship, we would probably have performed in par with the Swedish floorball teams. And that is due to one of the Swedish nation’s oldest inclinations.

Was the internationally educated upland who at a young age became head of Fugs Folds’s office.

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In the following decades he practically invented the Swedish state administration. A historian might possibly express it more pointedly, but Swedish society’s view of stopping down and organizing things in archives is largely derived from this time. It sounds noble, but order and readiness were, of course, a prerequisite for being able to feed the state with a battle of current tax and cannon food. It was war in Europe. However, the tradition lived on until peacetime, and can today be said to be a reason why we Swedes have a strikingly good look at each other’s actions. So good to know, that Big Daddy’s French credit manager Maine Laok gets “Big Brother vibes” (you can read or listen to Capital’s interview with Vincent here).

From all Swedish credit examiners’ perspectives, there may be reasons to be grateful to Oxenstierna’s companies. In Sweden, we do not know just who is asking for a loan (today thanks in large part to Bank ID). We also know where people live, if they have any cars, how many children they have and how much they earn. And through collaborations in business, credit information providers can also see how large your debts are. There are even statistically generated credit ratings that predict with striking good precision how likely you are to receive a payment note within a year. Of course, this can have opinions, but with the credit market’s fairly simple rules of play, it has its obvious advantages. Good information on the borrowers’ finances paves the way for better credit tests and lower credit losses, which also lowers the risk for lenders. It is of course good for the lenders, but also for the borrowers and for society at large.

So what does this mean for you as an investor?

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A natural question you ask (or should ask) for an investment in something is: do I get my money back? No one knows for sure, but in the case of Swedish private loans, the conditions appear to be very good. Maybe we should thank a bearded civil servant from Uppland for that.

John Bang