Best online payday loan direct lender -Direct online lenders only: Find out more

Direct online lenders only: Find out more

Borrowing money with an online payday loan direct lender is easily accessible and fast. Read more about the advantages and disadvantages of online payday loans direct lenders.

With a mini loan you borrow (the word says it all) a small amount with a short duration. This is a solution if you are temporarily short of money, for example at the end of the month. However, it is an expensive solution.

In contrast to borrowing money through the regular channels with interest rates between 4.2% and 7%, you pay with a mini loan converted interest of 13.99%. This is also the legal maximum rate that the providers must adhere to since 1 January 2016.

Extra costs mini loan

Mini loans are offered from € 100 to € 1000 to borrow. You must repay this within 15 to 45 days at an interest rate of 13.99%. In addition to these interest costs, a guarantee must be taken out. This is possible personally, but that is subject to many conditions.

Most consumers therefore opt for a guarantee through an external company. These are often the same parties that offer the mini loans. The costs for this guarantee increase quickly. We take an example of a mini loan of € 500 from Ferratum:

  • With a term of 30 days this extra guarantee is $ 140.88.
  • With a term of 45 days this extra guarantee is $ 170.82.

Again these are extra costs in addition to the already substantial lending rate.

Why are these mini loans closed then?

Despite the high costs, mini loans are still taken out. Not least because they are so accessible. A mini loan can be taken out easily and quickly. In addition, no BKR test is performed for this type of borrowing. A negative BKR registration is therefore not a limitation.

In addition, a loan from 1,500 euros can be taken out with regular lenders, followed by borrowing 2,000 euros and borrowing 2,500 euros.

From the rain to the drip

The low threshold mini loan offers consumers who are struggling with their personal finances the opportunity to (temporarily) compensate for a deficit. However, it is the same vulnerable group that gets into further trouble due to the high costs.

A cheaper alternative to extra spending room is in the form of a revolving credit. Because the BKR test is done here, a negative BKR listing is a limitation. For this group, there is nothing more than to cut back and first save for the largest expenses.

Getting your personal finances on the road, of course, remains the best and cheapest alternative to mini-loan.

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