The so-called microloan belongs to the family of so-called microloans, focusing mainly on a small loan amount, as the name implies. There are financial service providers that offer a small loan starting from only 100 euros. If the requested amount is 10,000 euros or more, then this loan is no longer considered a microloan. Just like most consumer loans, there is no set purpose. Microloans are especially popular because they are among the quickest and most flexible types of loans compared to other loan options. It’s perfect for making up small financial gaps and greatly expanding your financial field.
Such a mini-loan can be quickly and easily offered on the Internet, both for private and business purposes. This provides the advantage that the required loan amount is in the borrower’s account within a very short period of time. An additional amount of money is available within a few hours.
For middle-income employees, loan approval is usually not a big deal. But there are also other groups of people such as the self-employed, students, adult schoolchildren who work part-time and housewives. If they can prove a regular income of at least 700 euros per month net, nothing stands in the way of the loan being approved.
The microloan is usually used as a flexible staging loan to make urgent purchases or to take advantage of advantageous promotions. The microloan can also be used to balance a checking account, a vacation trip, furniture, a new smartphone, minor renovations, or car repairs. The possible uses are almost unlimited within the loan amount.
The micro and small loan is very charming because it can be completed in a relatively non-bureaucratic way and quickly. The processing process is greatly simplified and highly automated due to lower loan amounts, from application submission and credit check to loan granting.
Microloans are mainly offered as online loans through many financial service providers. Applications can be easily filled out at home on the computer, regardless of work and hours of operation of financial institutions. In many cases, banks give out the microloan as an immediate loan.
If there is an urgent need for money, then a microloan is especially useful, since the optimal procedure makes it possible to make a timely loan decision. However, even a small loan is not granted without a credit check. In any case, a credit check will be conducted.
If the process goes smoothly, the borrower can dispose of the money that arrived in his account after a day or two. If the deposit is made to the borrower’s account by express transfer, it can sometimes be used on the same day. However, it is important to check whether this express service is not associated with high additional costs.
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arguments for each
- If there are higher household expenses this month, additional cash will be provided with a small loan exactly when you need it. It can be used to pay extra for unplanned expenses like washing machine or car repairs and extra groceries before the holiday without having to pay a penny twice. Knowing that the money that can be obtained through a small loan can be available in any situation is very reassuring and especially practical.
- If the money is used up and there are still a few days left in the month, a short-term loan can be very beneficial until the next paycheck. The necessary expenses are thus covered until the new salary is transferred to the account. The car can be filled with fuel and the refrigerator can be filled with groceries. With this type of microloan, necessary daily expenses remain possible until the next payout.
- The advantage is that by taking out a small loan, additional funds are available in the event that you make an automatic purchase or take advantage of a great vacation offer. The financial cushion provides additional flexibility to push anything. The uses for a microloan are endless to give yourself a little extra.
- Since a microloan is also a loan, the client does not have to do without additional services. The same requirements apply to a regular loan. This applies to existing customers as well as new customers. Microloan providers want to retain customers for the long term. Those who already belong to existing customers can dispose of higher amounts and take advantage of other services. These are on the same level of service for new customers. Therefore, it is always worthwhile to take a closer look at the detailed information, even with a small loan, in order to find the best provider.
- A so-called micro-loan is always a good way to bridge financial bottlenecks. In addition, a mini-loan is never a long-term burden, as it can also be paid off in the short term. The loan amount paid can provide the necessary security without being subject to additional monthly fees in the long run. This benefit simply cannot be overlooked. There is hardly any other reasonable solution to bottlenecks in your liquidity, especially when interest rates are currently at a low level.
- But as with any other consumer loan, there are also downsides to a small loan to consider. Because small loan amounts can also lead to over-indebtedness. However, with a negative credit bureau, there is no small loan, and by comparison, the interest rates on short-term borrowed funds are high.
A microloan is usually a conventional loan with installments from a bank. Some providers of financial services on the Internet offer so-called short-term loans, which differ from this. Because after a short period, usually after 30 to 60 days, the short-term loan is repaid to the lender in one amount.
Small loans have another advantage. Loan amounts are particularly small. They range from €100 and usually do not exceed the maximum of €1,500. This offer is specifically designed for consumers to save money on small purchases or outstanding payments. The mini-loan is usually repaid with the next receipt of money or the next salary payment.
A small example to illustrate: the main inspection at TÜV revealed some defects in the car, which resulted in repair costs of 500 euros. Since the car owner cannot increase this amount at the moment, he takes a short-term loan in the amount. The loan is repaid to the lender after 30 days inclusive of interest in the amount of €505.79.
Differences between short term loan and installment loan
This type of micro loan is one of the classic installment loans. So the loan amount is repaid in fixed monthly installments over a certain period of time. The repayment portion and the interest portion are included in the repayment. As a rule, the interest rate is fixed throughout the term.
Due to the lower loan amount, the installments for the mini loan are lower compared to the larger loan amounts. This provides the advantage that groups of low-income people can also afford this type of loan. However, it should be borne in mind that the amount of the installment has a direct impact on the term of the loan.
Basically, if you choose a higher rate, you pay off the loan faster and pay less interest! If you want to apply for a small loan, you need to think about some important considerations beforehand. This also includes the possible rate of repayment. You should also consider how quickly the payment must be made in order to be debt-free again. These and other aspects form the basis for finding a cheap loan offer.
These requirements must be met
In order to get a small loan, the applicant must meet certain criteria. This includes the minimum age of 18 years. Because only those of legal age are creditworthy. The place of residence must be in Germany. A German bank account is also required. There should be no significant doubts about the applicant’s creditworthiness and negative Schufa entries. The basis of the loan commitment is regular income or other guarantees.
To apply for the microloan, the borrower provides his personal data such as surname, first name, date of birth, nationality, marital status and contact details. Economic data and Schufa score are also required when applying. This gives the lender insight into personal and economic circumstances. This is the basis on which the loan offer is made.
The borrower simply enters the required loan amount and preferred term on the comparison portal. Then a selection of loan offers from various financial service providers and credit institutions are clearly displayed along with the monthly installments and the effective annual interest rate. The pronoun comparison is always worthwhile. In particular, attention should be paid to the effective annual interest rate. In this way, a large amount of money can be saved in a short period of time.