Beware: new fast small installment credits can be expensive

Fast loans can be expensive

Fast loans can be expensive

New instant loans can be expensive!

The processing of applications for classic bank loans takes time. To accelerate this is basically not wrong. Individual options such as the video identification service instead of the postident procedure are also used by larger financial institutions and are advantageous for the customer who already has a webcam. By contrast, instant loans have always been associated with additional costs, which is not the case with the new lending credits with promotional product names. All offers for quick lending in common is that a consultation is not provided. However, such is recommended for loan agreements. At the same time, credit seekers perceive the offer of quasi-immediate funding as so lucrative that they do without an interest rate comparison. A really cheap installment loan, however, can only be found on a credit comparison that anyone interested in financial experts can easily and free of charge.

The instant loan in the classical sense

The instant loan in the classical sense

The classic instant loan, contrary to his name, does not come immediately after the application, but within a predominantly two bank working days for payment. The exact definition differs depending on the financial institution. Secure indicators are a clear acceleration of the processing of the credit application compared to the usual installment loan and an interest premium on this. Anyone who applies for an instant loan knows about the additional costs and accepts these, because he wants to have the money immediately. It is often not necessary to pay more for the changed interest rates, because many purchases can be ordered on account and paid within fourteen days.

What distinguishes the new express loans

What distinguishes the new express loans

New loan credits are provided with names like meelending and suggest simple borrowing. They are often especially for smaller sums of money, in the example offered this amounts to 5000 euros. The interest rate for the meelending is 4.99 percent higher than in the advertising of many other providers. However, centiloan applies a uniform interest rate for the aforementioned fast installment loan, while most competitors charge interest-based interest rates. The low interest rates mentioned in the advertisement receive only few prospective customers. Of course, nobody has to actually close the loan at a higher than expected interest rate, but very few will make a loan comparison after a first request. The number of short-term loan offerings is likely to increase in the near future as more and more banks lend out loans. This has not least competition reasons: who has once taken a installment loan with a financial institution, often turns in future credit needs again to the same contractor instead of a loan comparison to find the currently best loan offer.

Only initially interest-free loans

The brokerive applies for an initially interest-free loan. From 1 January 2017, however, a uniform interest rate of 3.9 per cent applies to all customers. The loan amount is a maximum of 50,000 euros. An interest rate of 3.9 percent appears fair compared to many instant loans. Even middle-rated borrowers, however, through a careful credit comparison, find installment loans that require less interest. The fact that advertising indicates the initial freedom from interest much more clearly than the later effective interest rate does not represent an exemplary implementation of the desirable cost transparency in bank offers. Rather, this type of advertising entices a borrower to take out a supposedly interest-free loan without further credit comparison.

The expensive short-term loans

Even more expensive than installment loans with a multi-year term are short-term loans, which are advertised as an alternative to the discretionary credit and are repaid within a short time, usually at a rate. In part, the repayment in two monthly installments is possible, for which, however, the providers charge a horrendous additional fee. Unlike in Anglo-Saxon countries, where discretionary credit is uncommon in private bank accounts, competition with banks in Germany leads to an interest rate limit above which hardly any bank customer would apply for a mini loan. Although the lending rate is equal to or even slightly lower than the disposable rate, there are likely to be additional costs. This is mainly due to the credit period of thirty days, while the bank account is often already balanced within a shorter period of time. It is also a matter of concern that not a few bank customers do not use the mini loan as an alternative, but as a supplement to the discretionary credit and thus have high debts. What is striking about most mini-credit providers is that while they correctly cite the annual percentage rate of return and the rate of repayment in one installment, they only hint at the additional fee for agreeing on two loan installments. The hard to find clue also applies to the extra fee for accelerated processing of the loan application.

Borrowing is too easy

The significantly higher costs compared to traditional installment loans represent only one disadvantage of modern high-speed loans. More important still is the increased enticement to take out a loan that is not absolutely necessary. Anyone who has to go to the nearest post office for an online installment loan in order to have the post-ID procedure processed there, often considers borrowing once more between submitting the online loan application and going to the post office. In the case of a loan disbursement immediately after the submitted online application, this period of time will be lost to thought. The right of revocation does not expire with credit contracts with the money transfer, but can still be exercised afterwards. In reality, however, a contract revocation is more likely to occur in the case of loans than after the money has been collected. Thus, accelerated lending is leading to consumers taking more loans than necessary.

A good credit requires sound advice

Quick loans are always given without advice. However, such is almost indispensable, which is why financial experts offers in addition to a credit comparison comprehensive credit counseling . Important points are the amount of monthly loan installments easily possible for the household. This can be determined much more accurately in a tailored to the specific case personal advice than with the standard assumptions of lightning loans. Also, the advantage of flexible repayment options over fixed redemption clauses is often unaware to borrowers. Depending on the purpose of the loan, it is possible to obtain a loan on special terms. This is generally known in terms of car loan, but refers depending on the bank on other issues such as holiday loans and debt restructuring. With more than 90 contract partners, financial experts’s experienced staff will find the lowest interest rate loan offer for each household. With a comprehensive credit comparison, a loan can not be disbursed within a few hours. The conditions are transparent and interest rates are favorable.

Conclusion: The new quick loans are received as fast as promised in the account of the credit customer. However, they are significantly more expensive than a classic installment loan found through careful credit comparison.

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