What is a small loan and how much is the loan? There is actually no general definition.
First of all, small loans are not a special type of loan.
These are normal installment loans that are paid out in one sum and have a fixed interest rate over the entire term.
The peculiarity is evident that the loan amounts are below average and in many cases the terms are relatively short.
However, there is no fixed limit up to which a small loan is used.
We once evaluated the search queries for individual search engines and found that most borrowers associate the term “small loan” with amounts of up to $ 5,000.
Who still offers small loans online?
Loans for very small amounts are impractical for borrowers and are generally expensive. If at all possible, you should refrain from, for example, mortgaging a loan of $ 500 in 6 months or in an even longer period.
Direct banks also generally do not like loans for very small amounts. Such financial products do work and promise little return.
Many loan offers only start with amounts of $ 2,500 or $ 2,000. Sometimes loans from $ 1,000 are possible.
However, some direct banks explicitly provide their customers with loans for very small amounts.
The direct money from Cream bank is interesting.
The bank even offers a small loan under $ 500. Loans are possible from $ 100 with terms of two to six months. The financial service provider is thus moving in the microcredit market segment.
The application process is lean. The expected interest is as high as relatively low interest rates on overdrafts. The minimum installment amount is $ 50 per month.
The optional video identification eliminates the need to go to the post office and makes the process faster. The bank advertises with a small loan with immediate payment. For a fee of $ 25, an express transfer is possible within 24 hours.
Another recommended provider is the direct bank. With this small loan, customers can choose interim amounts from $ 500 to $ 5,000.
With a credit comparison calculator, these offers can be quickly compared with similar loan offers.
To do this, set the permissible minimum amount. Sometimes it is also worth asking the regional savings bank.
Small credit from private to private, even for the self-employed
Credit brokers for personal loans also enable small loans. Trucredit offers loans from $ 1,000.
The processing of personal loans via such credit platforms is not possible overnight.
Applicants have to allow a certain amount of time until it is clear whether private investors want to finance their loan project.
The advantage for the self-employed, however, is that loans for private use are also more likely to be available to traders than to many direct banks.
Small loans and Credit bureau
The conditions are not negotiable and the same everywhere. It is therefore in vain to look for cheap small loans without Credit bureau. Interest rates correspond to those of overdraft rates and Cream bank do not grant loans free of Credit bureau.
The same applies to providers of microcredit. Those who have negative Credit bureau entries will only be lucky with these providers or similar providers in very rare cases.
However, there is an alternative for some borrowers.
The credit portal Trucredit, a platform for loans from private to private, gives users the opportunity to transfer their own car as security for a loan granted.
The motor vehicle is examined beforehand at the instigation of the credit platform. This increases the willingness of investors to finance loans even when Credit bureau is not so good.
Trial loans and other problem cases
Small loans are fundamentally excluded if there is no permanent employment relationship.
The prerequisite is always an employment relationship which is expected to exist at least until the end of the loan term.
Temporary employment contracts therefore do not exclude lending, provided that the duration of the employment relationship at least corresponds to the term of the desired loan.
A trial period, on the other hand, is always a reason for exclusion because a trial employment relationship can be terminated at short notice.
So if you are in a trial employment relationship, you cannot apply for a small loan yourself.
The same applies to people who are unemployed or Social Welfare recipients and, of course, especially for people who have no income at all.
Housewives or housewives without employment and their own income will never get a loan themselves.
This principle can be broken in individual cases if sufficient security can be provided.
In addition to assignments by way of security and assignment of claims or the pledging of real estate (no realistic option for small loans), suretysome guarantees or the direct entry of another person into the loan agreement are particularly suitable.
If other people are involved, the original applicant is never the real borrower. Rather, this is the other person whose creditworthiness matters.
Advantages and disadvantages of small loans
Taking out small loans with amounts of up to $ 2,000 must be carefully considered. As a rule, they do not pay off because the relationship between costs and services is simply not right.
This applies all the more to microcredits. If small loans are desired, then with the shortest possible terms. Longer terms make the loan more expensive.
Small loans should be limited to emergencies and should only be used to cover temporary financial needs.
If, for example, you suddenly have to pay for medical treatment yourself, or if there is an urgent need for repairs and the necessary own funds are temporarily unavailable, small loans and even small loans can be inevitable.
However, some alternatives should always be considered before taking out such loans.