This former niche product has long since become an important one Become part of the banking business. Below we answer the five most important questions about small loans.
A small loan is a loan with a comparatively low loan amount. Depending on the provider, the loan amount can be as low as 50 dollars. With other providers, the small loan can be 1,000 dollars or more. The loan with the small sum is becoming increasingly popular. In the past, banks often only gave loans of $ 5,000 or more. Anyone who needed a loan with a lower loan amount looked into the tube. Or had to borrow more than he actually needed and wanted.
Small loans have broken into this breach and offer borrowers the opportunity to take out loans with small sums. This only includes the amount that is actually needed. There is no overfunding, the borrower gets the amount he wants with the small loan.
How do you get a small loan?
Small loans are made possible by various providers. On the one hand, there are domestic banks that also offer loans with smaller loan amounts. On the other hand, these are providers from other European countries that only offer small and mini loans.
At the banks in Germany, the credit report query is generally required to take out a small loan. For small loan providers from abroad, this is not necessary for all providers.
How does a small loan work?
How such a loan works with a small loan amount depends on the provider. If a small loan is taken out with a provider from other European countries, it is often much easier to apply for and receive the loan. The credit request including processing is often fully digital. This means that the identification is carried out via video chat. The way to the next post office for legitimation is no longer necessary. The specialized small loan providers offer various optional services for their loans that are subject to charges. For example, the loan can be paid out within 24 hours.
With a small loan through such a provider, however, this must be repaid in one installment. A two-rate option is also possible, but this in turn costs additional money. The terms are usually very short and, depending on the provider, the loan amounts correspond to what is commonly understood as a typical mini loan.
The banks in Germany that offer small loans offer these with different loan amounts and very different terms. Such a small loan is normally repaid in several monthly installments.
Advantages and disadvantages of small loans
The big advantage of a small loan is the possibility to take out a loan with a small loan amount. This eliminates the need to raise more money than is actually needed. With some small loan providers from abroad there is another advantage: the loan is often granted unbureaucratically and with little effort.
The disadvantage of a small loan can be the cost. If such a loan is taken out with a provider from other European countries, high costs can quickly arise. Interest rates are still within limits. The optional services, such as express transfer or the 2-installment option, can then really cost money. Such a small loan should then be carefully considered, however practical the quick money is.
What do you have to watch out for with a small loan?
The important thing with such a loan is the cost. These can vary depending on the provider. A small loan comparison can help you find the right loan for yourself.
A small loan is always an option if a large loan amount is not required. But it is important to read the terms and conditions of each provider carefully before taking out such a loan.