Mini-loans are a very useful tool for making one-off payments, for anyone having to deal with an unexpected expense and who don’t have the money for it. On the other hand, when we think of bank loans large sums of money and strict requirements and conditions usually come to mind. Buying a car, remodeling your home…
This type of mini loan covers the need for small quantities of money, normally between €100 and €1,000, and it is processed quickly, generally without heavy requirements from the customer. Set against these access benefits are the interest charges for this type of product and their repayment conditions. Let’s go over their characteristics in detail.
How to take out a mini loan
These mini-loans are usually granted by credit institutions associated with banks, not directly by banks themselves. Therefore, the most common way to take out such a loan is over the internet. By completing a simple form, we are usually required to provide our personal details such as name, surnames, and ID, account number, and so on.
Moreover, to prove that we can repay the loan, they typically require both a bank statement that proves the status of our accounts and documentation to support our income; this can be anything from a salary to the receipt of a pension.
Another way to obtain a mini-loan is to get a credit card, which will let you defer payment for your purchases in the form of several monthly payments (with added interest charges). You can even transfer cash from your card to your account, up to the limit you have been granted, then make convenient monthly payments to pay back your balance along with the added interest.
Interest charges and the repayment period of a mini loan
Like in any other loan or credit we apply for, the interest charges associated with a mini loan vary depending on the credit institution that grants it. Typically, we will find mini loans from a 1% daily interest rate, although the final price of the loan is usually indicated over a 30-day term, such as €500 cost after 30 days. This type of loan, therefore, has higher interest charges than those that are usually associated with short-term loans for larger sums.
Moreover, unlike regular loans, mini loans have to be repaid in full after 30 days, since in the event of any delay, late-payment interest charges will come into force. There is, therefore, no possibility to split up the payment.
Given their interest charges and their fast maturity, this form of financing is only recommended for customers that have to deal with an unexpected expense or an emergency and are sure that they will be able to repay the capital requested, plus its corresponding interest charges, within one month. That said since they have a fixed interest rate and a short repayment period, the customer always knows what the exact cost of their loan will be.
Requirements for a mini loan
One of the most interesting benefits of this type of financing is that it barely has any granting requirements. Unlike regular loans for larger sums of money, these small loans do not require the customer to provide an endorsement; or to have a salary, although they are required to have a source of income that the applicant can prove.
As the requirements for taking out a payday loan of this kind are minimal, they are usually granted on the same day as they are requested and, in some cases, even within a matter of minutes of the application being made- legal options for payday loans.