Short-term loan: Why it is cheap only with rapid repayment

More and more consumers are taking advantage of the opportunity to take out a mini loan. The special thing is the short term, which is why this short-term loan is ideal until the next salary or salary is received in the account.

Image result for short term loanIt serves as a bridge and is significantly lower in interest than the credit line on the current account. There are relatively few vendors in this very niche, which grant a micro- loan with extremely short term. For most banks, this is too time-consuming, because most of the small loans are amounts up to 1,000 euros. As a rule, customers even want to have an even lower amount to bridge the gap. For new customers, there are anyway restrictions on the sum.

The terms and what there is to know

The maturities within these providers could not be more different. Vexcash offers terms of seven to 60 days. At Targobank, customers can even take up to six months to repay the loan. Worth mentioning at this point, however, is that the cost of a mini loan for a short term are lower. If you want to take your time with the repayment, you have to pay more interest (and occasionally fees in advance).

How does the customer get a mini loan?

Image result for short term loanAll top providers use the new VideoIdent process, which eliminates the need to travel to the post office. The customer can identify himself directly in front of the webcam. Also, the submission of all forms is done online . All you need is a fast Internet connection and a webcam. The customer holds his identity card in front of the camera for identification and the employee of the named financial service provider checks the data. All other documents can also be submitted online. After the loan seeker has applied for a short-term loan, he gets within a few minutes, whether a short-term loan is possible or not.

What makes a short-term loan expensive?

If you want to have the money in the account within 24 hours, you have to choose the option Lightning Transfer. However, this is associated with high fees. These can be around 39 euros to 100 euros . Whether this really pays off, the borrower has to decide for himself. But there are other reasons that can make a loan more expensive. This is the case if the mini loan is not repaid on time. Then interest on arrears and costs for a dunning procedure apply. Therefore, borrowers should think twice before they can repay the loan on time. If you are unsure, you should opt for a longer period of 60 days (2-rate option) or take it completely away.