REVEALED: The European countries with the most affordable personal loans – Luxembourg crowned top

2024 01 26

 

  • New research has identified the most affordable European countries for personal loans, with Luxembourg coming out on top 
  • The analysis calculates the loan repayment as a percentage of the disposable income per person after accounting for expenses, salary, and bank interest rates  
  • Of the 36 countries that had the full data available, Ireland follows as the second most affordable country for personal loans, with Denmark in third while the UK ranks as the least affordable
  • A personal finance expert shares tips on what to remember when taking out a loan, including keeping an eye out for additional fees you may incur 

A new study has revealed the most affordable European countries to take out a personal loan, with Luxembourg claiming the top spot.  

Loan experts Lånea analyzed data from Trading Economics, the Organisation for Economic Co-operation and Development (OECD) and Numbeo to create an index of the European countries most affordable for those wanting to take out a personal loan.  

The findings subtracted consumption expenditure per capita from the typical salary in each country, to calculate the disposable income. The total cost of a personal loan repayment of 10% the average salary (plus the national rate of interest) was then calculated as a percentage of the disposable income. 

This information comes at the perfect time, with many people setting an aim to save money and spend more frugally in 2024 – especially after the burden of Christmas spending. 

Many will be tempted to get a loan to tide them over, but doing so in some countries will put you in a worse financial position than had you not taken out the loan in the first place due to high interest rates, poor annual salaries, and rising living costs. 

In first place as the most affordable country for personal loans was Luxembourg with a personal loan repayment of €626.76 per month, equivalent to 18.98% of the average disposable income – the lowest in the study. This was based on a loan amount of €7,197.67 plus a national interest rate of 4.5% repaid over the course of a year. 

This was based on average living costs of €32,336.09 per year, and the average annual salary of €71,989.25, leaving an estimated disposable income of €3,302.47 per month, from which 10% of the annual salary plus the bank interest rate was deducted. 

Ireland followed in second, with a personal loan repayment of 19.27% of the average disposable income, which equated to €399.59 per month. This was taken from a national interest rate of 4.5% on top of a personal loan cost of €4,588.57.

This was determined with living costs of €21,000.85 deducted from the average salary of €45,885.71, revealing an estimated monthly disposable income of €2,073.73. 

In third was Denmark which had a personal loan repayment rate of 19.33% of the average disposable income, which corresponded to €469.53 per month. This was based on a €5,438.53 loan amount added to a national interest rate of 3.6%. 

Denmark was revealed as having an estimated disposable income of €2,429.40 per month after the considerations of average living costs of €25,232.65 and a salary of €54,385.39.  

Taking the fourth spot was the Netherlands with a personal loan repayment of 19.53% of the average disposable income, equaling €373.92 per month. This used a loan amount of €4,294.65 which was increased by a national interest rate of 4.5%. 

This Netherlands had average living expenses of €19,972.63 alongside a salary of €42,946.51. This provided an estimated disposable income of €1,914.49 per month. 

Rounding out the top five was the Czechia with a personal loan repayment of 19.85% of the average disposable income, amounting to €163.69 per month. This was deduced from a personal loan amount of €1,835.78 in addition to the national interest rate of 7%. 

Living costs of €8,460.09 were subtracted from a salary of €18,357.79, disclosing an estimated monthly disposable income of €824.84. 

In sixth was Sweden with a personal loan repayment of 20.12% of the average disposable income, which was the equivalent of €415.57 per month.  

Following in seventh was Norway with a personal loan repayment of 20.40% of the average disposable income – the same as an average monthly payment of €563.57. 

In eighth place was Estonia with a personal loan repayment of 20.50% of the average disposable income, corresponding to €180.96 per month. 

Germany came in ninth with a personal loan repayment of 22.01% of the average disposable income, which amounted to a monthly sum of €346.24. 

Concluding the top ten was Belgium with a personal loan repayment of 22.04% of the average disposable income, which equaled to €336.26 per month, cementing the country as one of the most affordable in Europe to take out a personal loan. 

Rank 

Country 

Loan repayment as % of disposable income 

1 

Luxembourg 

18.98% 

2 

Ireland 

19.27% 

3 

Denmark 

19.33% 

4 

Netherlands 

19.53% 

5 

Czechia  

19.85% 

6 

Sweden 

20.12% 

7 

Norway 

20.40% 

8 

Estonia 

20.50% 

9 

Germany 

22.01% 

10 

Belgium 

22.04% 

11 

Ukraine 

22.13% 

12 

Austria 

22.97% 

13 

Finland 

23.44% 

14 

Lithuania 

23.81% 

15 

France 

24.11% 

16 

Slovenia 

25.04% 

17 

Iceland 

26.02% 

18 

Hungary 

26.05% 

19 

Bulgaria 

27.39% 

20 

Spain 

27.74% 

21 

Slovakia 

28.25% 

22 

Switzerland 

28.63% 

23 

Latvia 

28.92% 

24 

Poland 

30.20% 

25 

Italy 

30.47% 

26 

Moldova 

 

Source, https://www.lånea.se

 

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The magazine JŪRA has been published since 1935.
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published since 1999.

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