- One third of installment loans are already mini loans
- That’s how he calculates Financial provider Cashper
- the Credit card can help
The names are varied: Mini, small or micro loans. It’s always about one acute financial distressfor bills that have to be paid immediately, while the house bank or savings bank no longer wants to grant credit. The obligatory Schufa report would often be negative, which is why those affected want to avoid it. In this situation come Mini loans (usually between 100 and 1,000 euros)where the provider clicks on the Credit check waived and besides promises great conditions, just right. But the quick money that comes along so conveniently has so its pitfallsas our research shows.
A third of installment loans are already mini loans
How common are small loans? the Schufa reports that there is a sharp rise in microcredit. The number of new installment loans in Germany has risen again for the first time in four years. In 2021, around seven million Installment loan contracts newly concludedaround 4.5 percent more than in the previous year.
Decisive for this development is, according to the data of the Schufa, the increasing number of microloans. The proportion of installment loans below EUR 1,000 in the newly concluded loans increased from 19.9 to 29.5 percent. The trend towards microcredit can be especially among younger consumers watch. “In general, it can be said that the younger the consumer, the lower the average amount of new loans under 1,000 euros,” explains Ole Schröder from the Schufa board.
The internet is full of lenders of small amounts. You have a special target group: People in financial need who need money quickly, for example to avert an impending power cut. The economic consequences of the pandemic and high inflation are increasing financial pressure and thus also the demand for mini-loans.
This is how the financial provider Cashper calculates
During financial test or financial tip hardly pay attention to this market can be found on the comparison portal Verivox Information. The portal lists seven providers for a loan amount of EUR 500. the Novum Bankwith its branded subsidiaries cashers, and mini loan immediately catches the eye. The companies, which are based in the small town of Ta’ Xbiex in Malta, promise the mini loan at zero interest. A free loan without credit bureau information – is that possible?
Yes and no: A look at the fine print cashper shows that the Zero interest deal for first time customers onlywho applies for a loan applies. The company usually calculates this: For a short-term loan of 300 euros for 30 days, regular customers have to pay an effective annual interest rate of 7.95 percent. Next to the “bait offer“ for new customers is there other special features: The payout of the mini loan usually takes up to 10 working days. This is too long for many customers, after all it is urgent. Often there are acute financial difficulties. Therefore offers Cashper the “SUPER deal” on: Payout within 24 hours. Fees apply for express processing. For amounts up to 199 euros: 39 euros fee, for a sum of 200 to 399 euros the fee is 69 euros and from 400 to 599 euros credit it is 99 euros.
Additional hefty fees apply when there is a postponement of the repayment date, when you need two installments for the repayment, when there is a payment delay and when there are reminders. The additionalfees are high compared to the low loan amount and can over 30 percent of the loan amount turn off. In this case, the mini loan becomes significantly more expensive. Our tip: Be sure to check whether the 500 euro loan is really worth it for you.
The credit card can help
The others at Verivox listed mini loan providers offer such cashpresso (based in Austria) an effective fixed interest rate from 14.99 percent or Vexcashwhich offers an effective interest rate of 14.82 percent. ferratum comes with an effective interest rate of 10.36 percent. All three providers are thus well above the installment loan rates of the banks.
the BNP Paribas (German branch) is one of the few major banks that even offers mini loans of up to 500 euros. At the French bank, only 2.99 percent effective interest is payable. It is understandable that BNP is a customer favorite among Verivox users.
Our tip: One Credit card can be an alternative to the 500 euro loan. With credit cards with a fixed credit limit, users usually receive a small loan for up to 30 days without any interest. Depending on the credit card, you must then either pay back the entire loan amount or monthly installment options can be selected. The resulting interest is usually still lower than overdraft interest. They are currently up to 14 percent.
Conclusion
Anyone who takes out a small loan is poorly protected. The relevant consumer protection regulations in the lending industry for loans only apply to loan amounts of 200 euros or more. This makes business easier for the moneylenders. You neither have to check the creditworthiness of your customers nor submit a written contract including an overview of costs. In addition, the usual rights of cancellation do not apply. All of this can lead to customers taking out overpriced loans. Therefore: You should avoid mini-loans for four weeks, using a credit card is the better solution.
