Microcredits or fast loans have become one of the most requested types of loans in recent years. This is due to its attractive advantages, such as the speed of obtaining the money or that no guarantee is required. Do you know what are its advantages and disadvantages? Do you know what is the maximum amount of money you can get or what are the costs of returning it?
Keep reading, because we will immediately solve all your doubts about microcredits.
What are microcredits?
They are a form of financing provided by some entities, consisting of lending small amounts of money (usually less than 1,000 euros ) to be amortized over very short periods of time , generally between one and two months. You can count on higher interests than those with a traditional loan.
Even so, they are a highly demanded financial product since the delivery of money is easy and fast. After applying online or by phone, money is received within 24 hours .
Also, there are no questions or requirements. It is not necessary to say what the purpose of the money is going to be. Likewise, only a preliminary study is carried out to assess the client’s risk. It is, therefore, an alternative for those who seek fast financing and who do not have access to traditional banking to obtain it .
The only point against these products is their cost, since the user must pay for the immediacy with which they get the money.
Advantages of microcredit
Although microcredits have a higher cost, they can be a relief for those who need a small amount of money urgently and without explanation.
Its most outstanding advantages are:
- Speed. E l process of applying for this type of financing online is very quick and easy. Once the user requests the money and sends the necessary documentation, the entity can transfer the money within 15 minutes to an hour. Depending on the bank to which the amount is sent, it may take a maximum of 24 hours to arrive.
- No paperwork . Being such small amounts of money, most of the entities that offer microcredits do not require any type of extra documentation or guarantee. To get financing, it is enough to be over 18 years old, to have residence in Spain, to have a bank account and a mobile phone.
- No endorsement, no payroll . Generally, when it comes to microcredit, you don’t usually ask for payroll. However, this will be necessary to request mini-credits and other quick loans (over 500 euros).
- No questions asked . Whatever the reasons for requesting financing, the user will not be obliged to detail them. The only ones who will know that you have applied for the loan will be the client and the bank or lender.
- First free credit . There is a constant increase in competition and a boom in the demand for this type of credit. Because of this, banks and lenders are improving their conditions to attract more clients. For this reason, most entities offer the first free credit, without costs or interest.
Disadvantages of microcredit
There is no doubt that this type of loan has attractive advantages. However, it is important to understand the most convenient use of these quick loans. They must be used for emergencies and exceptional cases, such as covering an unforeseen event or facing an emergency .
The drawbacks are really few, but it is important to keep them in mind. Here is a list of them:
- High cost . The main disadvantage of this type of financing is the cost involved. Interest and fees are usually much higher compared to a traditional loan. This is mainly due to the ease and speed with which the microcredit is granted.
- Overindebtedness . Due to the ease with which these loans are granted online , they can pose a risk to the client, since there is more probability of getting into debt and ending up on the list of defaulters. If this is your case, you should know that there is the option of leaving this list of delinquencies and ending the accumulation of debts.
- High interest for late payment . If difficulties appear to face the payment of a microcredit, there is the option of obtaining an extension of payment. However, the extension of the expiration date will have costs. In addition, the interest that will accrue until the new due date must be paid.
- Commission for non-payment . There is also usually a commission clause for non-payment that must be paid in the event that you have not returned the money in the stipulated time.
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