A breakdown of the car, a bill higher than expected, an appliance that breaks down … life is full of unforeseen events that can unbalance our budget and make us spend a hurry at the end of the month. Then there are those extra expenses that sometimes we can not afford but we do not want to postpone, such as a trip or the purchase of a new smartphone.
To face these extra expenses, unforeseen or not, there are so-called personal loans . Until a few years ago, these loans were in the hands of banks almost exclusively. It was the savings entities that, analyzing the profile of the applicant, decided if it was suitable or not to receive the money.
With the outbreak of the 2008 crisis, the situation changed. The banks closed the credit lines and private lending entities emerged that offered rapid financing to individuals and SMEs through the Internet. This is how mini-credits or quick loans came online . Nowadays, this market is very widespread and thousands of people resort to these financing systems as a preferred option to get extra money.
Types of online loans and requirements
In order to choose the loan that best suits our needs and circumstances, it is important to first know the types of products offered by the market.
They are private loans unrelated to banks that do not require payrolls or guarantees and that allow relatively small amounts of money to be obtained: from € 50 to € 900 depending on the entity.
Mini-credits are processed online in a fully automated way. The procedure is very quick and simple, it is only necessary to fill in a questionnaire, determine the amount of money that is needed and adjust the return period. If there are no serious impediments, which usually do not, in a few minutes the money will be deposited into the applicant’s account.
They are loans of larger amounts, usually ranging from € 1,000 to € 6,000, depending on the company or entity that processes it. This type of product is usually offered also by banks for their trusted clients. The requirements to access these loans will depend on each entity. Unlike mini-credits, they usually require payroll or some type of verifiable income.
They are quick loans that are processed by phone. The amounts are variable, can range from € 300 to higher figures. The requirements change depending on the number. In order to reach high quantities, guarantees are usually required.
How much interest is paid?
When applying for a quick loan, it is important to know the loan repayment conditions and the interest that will be applied. As a general rule, specialized web pages have simulators or calculation tools that allow the customer to know exactly the amount to return.
The figure will basically depend on the return periods stipulated in the contract. If the money is returned within a few days, the interest will be less than if a longer period of time is chosen. We must also count on the so-called management expenses. Some lenders do not charge interest or management fees to new clients in their first operation.
How did the microloans arise?
The origin of the microloans is in Bangladesh, in Southeast Asia, and the professor is the economics professor Muhammad Yunus . In the 70s, this expert formed the United States was looking for a way to help the most disadvantaged population, victim of famines and extreme precariousness. He came up with the idea of creating quick lines of credit, with which many people were able to set up small businesses and deal with their most urgent needs.
Yunus created the Grameen Bank , a bank based on trust that found a very revealing fact: only 2 percent of loan applicants did not pay. The rest, 98 percent, faithfully fulfilled their obligations.
The initiative of Muhammad Yunus was awarded the Nobel Peace Prize and inspired loan institutions in the West. With the impulse of Internet, the fast credits have reached an enormous popularity. According to data from the World Bank, it is estimated that there are currently some 7,000 entities that offer mini-loans through the network.
According to the latest studies of the sector, the average profile of the applicant is a male between 30 and 50 years old who is salaried and who asks for an amount of not more than € 300. The analyzes show a change in trend with respect to the situations that lead to requesting an online credit. If until recently the loans were destined to cover unforeseen or urgent needs, at present they are the most valued option to finance planned expenses, such as a small reform at home or a vacation.