A mini-loan is a loan over a still manageable sum, approximately in the order of one hundred euro to approximately 10,000 euro as upper limit.
line of credit
The best known mini loan is called the credit line or overdraft credit. This means that you withdraw money from your current account, without any is still available. The bank grants a credit line, which is based on the regular receipt on the account. This can be negotiated with the bank. If you cover the account even more than the credit line granted, interest rates rise again. The credit line is the most expensive loan. He has the advantage that he is easy to get and pay back. You just balance the account again.
Interest often amounts to ten times the installment loan. So it is really only suitable if you have the sum very quickly back in the account, otherwise you pay without end the overdraft interest.
So if you need money at very short notice, the overdraft is cheap, because it is quickly compensated for it and so the extremely high interest rates are not significant.
The installment loan is negotiated with the bank. Depending on its credit rating, it grants or refuses credit. The interest rates are usually also based on the credit rating, as with lower credit rating for the banks, the risk is greater that the client does not repay the loan. Then the loan is backed by a fixed rate of interest and usually repaid at regular installments agreed in advance.
There is also the possibility to arrange special payments, so that you can repay the sum faster. Depending on the bank, higher fees will be charged.
Before getting a loan, the bank usually checks the credit rating. It asks for the income and what other loan rates have to be serviced. Then decide whether another loan can be repaid without major restrictions. In general, it is also checked whether there are already entries in the private credit. This can be the case, for example, if you already have debts, for example, rent or has already filed for bankruptcy.
Then the bank checks what the loan is needed for, for example, for necessary purchases , such as a car or business start-up, or simply as a consumer loan or for a vacation or move.
Crucial for the cost of the installment loan are the term and the interest rate. In the case of a long duration, of course, there will be more interest in the sum than a shorter one, but the monthly burden will be lower as it spreads over a longer period of time. So you should exactly calculate what rate you can afford in the month and then set the highest amount for the repayment, because the cheaper the loan.
Before deciding which credit to take on which bank, you should necessarily calculate a comparison of the various conditions, because it can easily save hundreds of euros.
A mini loan is a loan with a fairly short term and a small loan amount. Usually the duration is 30 days. A fixed income in the amount of 500 euros meets the requirement for loan approval for many providers. This variant is offered almost exclusively by direct banks or from private to private. In any case, this is a typical online loan. Due to the short term, very low interest charges arise.
The term small loan refers to the mini loan. With this type of credit, it must be taken into account that very high fees are payable if the repayment is late. The extension to 60 days is also very noticeable in the amount of extra costs.
Explanations on small loan
Micro and mini loans are also in this category. Three different maturities are offered by default on these loans; namely 15 days, 30 days and 60 days. The slogan of the banks is to apply for a mini loan and repay the next salary. That’s the perfect solution. The loan amount ranges between 50 and 600 euros. This regulation applies to new customers. So-called “regular customers” can borrow up to 3,000 euros if they have paid the previous loans properly and punctually.
As a rule, there is only one installment; in exceptional cases, two installments can be agreed on, with considerable additional costs. The experts warn against accepting a mini loan to service a current loan. At some point, the customer is no longer able to settle his monthly expenses and then ends up in the debt trap. The mini loan is preferable to the credit line, because the interest charge is not in the same amount as the credit line. The interest rates on the mini-credit of various banks are between 7.95% and 13.9%. Due to the short maturity, interest charges are low.
The mini loan without private credit does not exist, but there is the mini loan despite negative private credit rating. Anyone interested in a mini loan needs the money as soon as possible. This is also known to the dubious providers, so there are small loan offers on the Internet with very favorable conditions.
Caution is advised when fees are already required for the application. The interest rates are usually very high. The customer is held out, may even conclude even obscure insurance, just to get the money quickly.
A private credit query is of course not even considered by these providers. However, for the consumer, the fact remains, fees paid, loan requested, but there is never a loan. The safest way is to turn on comparison portals or reputable credit intermediaries. The listed rated banks and institutions are reputable, so that the customer can calmly choose the right provider for him.
The typical provider for small loans presents the following offers:
- Total 300 Euro, 30 days duration, final amount incl. Interest 303,27 Euro
- Total 400 Euro, 30 days duration, final amount including interest 404.36 Euro
- Sum 500 Euro, 30 days duration, final amount incl. Interest 505.45 Euro
- Sum 100 Euro, 15 days duration, final amount incl. Interest 100,58 Euro
The low interest charge is obvious, so the mini loan is the optimal solution to the emergency. There are actions in this sector, for example, 100 mini loans with the loan amount of 1,000 euros, were drawn and calculated with zero interest. However, the borrower must have an excellent credit rating. The longer the term, the more interest charges are incurred.
Tips on mini loan
1. Review fees before applying
The borrower should also take into account the interest rate on these small loans. Nobody knows what will happen at some point, so it can not be ruled out that a financial problem can occur again within the term. Therefore, when choosing the provider should be paid attention to how much the cost of late repayment.
The fees for non-compliance with the payment deadlines are exorbitantly high for any relevant provider. The customer may have the option to pay the loan amount in two installments. However, if agreed after the conclusion of the contract, disproportionately high costs will be charged. The tip is to contact the provider immediately if the repayment can not be realized on time to find a suitable solution.
2. Providing the documents before applying
For each loan application documents are required by default. The tip is to keep documents. The current registration certificate should be obtained in good time by the competent authority. Important documents in copies:
- identity card
- registration card
- Statements of the last three months
- for self-employed business registration and tax assessment
Unemployed or reform recipients can also apply for mini credit. The confirmations of the monthly regular entries must be available, which should not be less than 500 euros. The registration certificate confirms that the borrower is resident in the Federal Republic. The bank statements prove that the borrower has a checking account with a German bank, which is one of the conditions for obtaining the loan.
At the same time, the bank checks whether direct debit notes have been made or payments have been made to debt collection agencies.
3. Review costs reminders and express transfer
Now the customer has finally found the right supplier, as tailored to his needs. Two important points should be checked before applying, and how expensive are any dunning fees. Three reminders can be made within 2 days with calculation of the agreed reminder fee and then a collection agency is commissioned. Some providers say laconically that the payout time takes up to 8 days, but an express transfer is quite possible.
Unfortunately, the fees for the express transfers in relation to the loan amount are outrageously high, up to 70 euros and more.
4. Consider comparison portals
In the Small Loans section, it makes sense to look at the comparison portals on the Internet. The providers vary greatly in terms of interest rate, maximum loan amount or fees incurred. As already mentioned, there are unfortunately many dubious providers. The borrower is well advised to look around in a comparison portal. The rated banks are reputable , with the different offers showing big differences.
The dubious provider is recognizable by charges are charged immediately before the application was ever sent. This is an alarm sign. To great deals, which lack any logic, advise caution. No bank will put deals on the internet with such fantastic options that the bank will accept losses and the customer will be happy.
5.Second applicant or guarantor
If the borrower does not expect such a perfect private credit valuation, it must be expected that the provider will grant a small loan, provided, however, that a guarantor or second applicant signs. In these cases, the tip is to make already in the application, who can be guarantor in the circle of acquaintances. The spouse can of course fulfill this request, but most are spouses in the same unfavorable financial position. Are there friends who can be co-applicants or relatives?
If the bank approaches the customer with the request, the question should already be clarified as to who takes over the guarantee or signs as a co-applicant.