Micro credit – so what is that?

A small loan is a loan that is only granted for a small amount. In general, such loans are found in the context of smaller purchases. For example, the retail trade grants small loans when buying electronic devices such as TV sets, dishwashers or washing machines. These then cover the rather low purchase price of up to 2000 dollars and are therefore referred to as small loans.

In addition to various service providers and service providers from industry and business, a small loan is also offered by most banks. A small loan gives the borrower a rather small loan amount. However, there is no clear definition of the maximum amount of this loan so that a loan can be described as a small loan. As a rule, the loan amount for a small loan is between 5,000 and 10,000 dollars. Such a loan is also repaid in installments, which are fixed over a certain period of time. A small loan is usually repaid over a short or medium-term period. There are no small loans that are granted over a long-term period. A small loan is always subject to the price regulation. This means that the lender must clearly inform the prospect about the costs of the small loan.

 

The cost of the loan is the interest

The cost of the loan is the interest

In detail, one speaks here of the effective interest rate and the additional costs of a small loan must be clearly stated before the contract is concluded. Usually, borrowers use a small loan as a Debt restructuring option if, for example, the current account is overdrawn. If you apply for a small loan, you can replace the overdraft facility, which usually involves very high interest rates, and top up the account at short notice. In addition, a small loan is often used for smaller purchases such as large electrical appliances or used cars. In addition to banks and trading companies, many private individuals also give small loans. In any case, a contract should be concluded for the small loan granted and the modalities

 

Whether you get a small loan or not varies from provider to provider

Whether you get a small loan or not varies from provider to provider

Some check the income and solvency, at other institutes you can also get a small loan without having to prove a regular income. Some institutes also require Schufa information before granting a small loan. In addition to the offers of the big banks, there are now also many online banks that offer such loans, often at more attractive terms.