Small loans and consumer credit rules in Denmark

Denmark is one of the few EU countries with a hard legal ceiling on the cost of consumer loans. Since 2020, a loan with an APR above 35 percent, or whose total credit costs exceed the amount borrowed, cannot lawfully be offered to consumers. The reform was aimed squarely at the quick-loan (kviklån) market, which had grown rapidly and left many young borrowers in debt.

For anyone looking for a small loan in Denmark, the result is a smaller, more tightly supervised market, a thorough check of your finances, and a set of alternatives worth considering before you apply.

Who may lend in Denmark

Banks are supervised by the Danish Financial Supervisory Authority (Finanstilsynet). Since 2020, non-bank consumer credit providers also need authorisation from Finanstilsynet and must meet requirements on management, conduct and creditworthiness assessment. The authority publishes a register of authorised firms.

• Check that the lender appears in Finanstilsynet's register before applying.
• Applications are usually made with MitID, the national digital identity, and lenders may request access to your tax data to verify income.
• Foreign lenders marketing to Danish residents must also respect the Danish cost caps.

The cost caps in detail

The Danish rules, introduced through the Consumer Credit Act and related legislation, combine two ceilings:

• An APR cap of 35 percent (in Danish, ÅOP, the annual percentage rate including fees).
• A total cost cap: the combined credit costs over the life of the loan may not exceed the amount borrowed.

A contract that breaches these limits may be invalid. The caps make extreme payday-style pricing impossible, but 35 percent is still very expensive compared with a bank loan. The cap is a maximum, not a fair price.

Marketing restrictions

Danish law also restricts how high-cost credit may be advertised, for example in connection with gambling. If you see a loan advertised alongside betting offers, or promising money "in minutes" to anyone, treat it with caution.

Creditworthiness and registers

Lenders must assess your ability to repay, and in practice this involves looking at your income, fixed costs and existing debts. Two kinds of register matter:

• Debtor registers: private databases such as RKI (operated by Experian) and Debitor Registret list people with unpaid debts reported by creditors. Most lenders refuse applications from people who are registered.
• Your own data: you have the right to see what is recorded about you and to have errors corrected. A debt that has been paid should be removed from the debtor register.

If you are listed in a debtor register, our page on borrowing despite a poor credit history explains why help with the existing debt usually comes before any new loan.

Forms of small credit you will meet

• Bank consumer loans and overdrafts: typically the cheapest option if you have a stable income.
• Credit cards: fine for a short gap if cleared quickly; interest and fees vary widely.
• Consumer loans from non-bank providers: faster, but usually closer to the legal ceiling.
• Buy now, pay later and instalment purchases: convenient at checkout, but late fees and multiple small agreements can add up.

Our guide to applying for a small loan online explains how to read digital offers, and our cost calculator shows what an APR means in kroner.

Newcomers and residents without a credit history

If you have recently moved to Denmark, borrowing can be difficult even with a good job. Most lenders expect a CPR number, a Danish bank account, MitID and a record of income in the Danish tax system, and some require a minimum period of residence or employment. A short credit history in Denmark is not the same as a bad one, but it gives the lender little to assess. In the meantime, your own bank is usually the most realistic first contact, since it can see your salary payments directly. Be especially careful with offers that promise loans to new arrivals "without MitID" or "without a CPR number": a lawful Danish lender has to identify you and verify your finances, so an offer that skips these steps is more likely to be a scam than a shortcut.

Checklist before you borrow

• Confirm the lender is authorised by Finanstilsynet.
• Compare ÅOP and the total amount repayable, not just the monthly payment.
• Check that the cost respects the legal caps.
• Read the standard European pre-contract information.
• Make a budget for the whole loan period, including rent, transport and food.
• Remember your 14-day right to withdraw.
• Never pay a fee to receive a loan.

Alternatives and free help

Before borrowing, consider:

• Talking to your bank: a rescheduled loan or a short-term arrangement may be cheaper than a new product.
• Municipal support: your local municipality (kommune) can, in specific situations, provide help with certain necessary one-off expenses under social legislation. The rules are strict and assessed case by case.
• Free debt counselling: several non-profit organisations offer free and anonymous debt advice in Denmark, and some can help you negotiate with creditors.
• Debt relief (gældssanering): for people with debts they cannot realistically repay, the bankruptcy court can grant debt relief under strict conditions.

If you are already falling behind, a new loan to pay old debts usually increases the total burden, even under the cost cap.

Scam warning signs

• loan offers by text message or social media from people you do not know;
• requests to share your MitID, or to approve a login or payment you did not start;
• a demand for an upfront fee, deposit or insurance payment;
• promised approval despite a debtor register entry.

Never let anyone else use your MitID: fraudsters use it to take out loans in victims' names. Comparing with other Nordic countries? See our guides to small loans in Sweden and borrowing in Norway. The UK resources listed below cover British firms only and are included for readers with finances in both countries.