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Mini-credits and the cost of fast money

Surely you have seen offers of fast money in the form of mini – loans that promise money instantly and even without guarantees. These types of proposals come from companies specialized in the granting of short-term loans, but which are not financial entities (and therefore, are not affected by the regulations that regulate them, or supervised by the MoneyConn Bank).

The mini-loans are usually loans of up to 600 dollars, to be repaid in a term that is usually between seven and forty-five days. After a brief analysis of the client (it can take about ten minutes) some companies grant loans even to people without payroll or listed in delinquent files.

 

Are these types of loans recommended?

Are these types of loans recommended?

Many people go to this type of financing when there is an unforeseen event for which they do not have liquidity. The speed at the time of the concession and the few guarantees that are requested are variables that influence so that some opt for this alternative. In other cases, there are even those who usually use them regularly to “cover holes.” However, before we even consider this type of solution we must also weigh the disadvantages, which are very significant, and meditate on other options we may have.

Advantage

  • Fast and relatively simple concession.
  • In some cases, mini loans are granted to people listed on delinquent records.
  • Guarantees or guarantees are not usually necessary.

Drawbacks

  • They have a much higher cost than the market, with Annual Equivalent Rates that exceed 3,000%.
  • In the case of default, the amount owed can grow rapidly, doubling in two or three months. To this will be added, in addition, the inclusion in a file of delinquents and, in many cases, the sale of the debt to a recovery company, many of which use pressure methods at the limit of the legal.
  • You run the risk of “getting used to” the facility they offer (or getting caught up in their mechanics), continuously paying a high financial cost.
  • If the request is rejected, they have no obligation to explain the reasons for the refusal.

 

Alternatives to mini-credits

credit loan

The request for a mini-loan should be one of the last options to consider for the reasons discussed above. So what options do we have if we urgently need money?

 

Resorting to the classic “F’s” of funding: family and friends

family and friends

It is a right that cannot be requested on a regular basis (since it is an exception on the time of salary settlement), but it can promptly get us out of trouble. Even in some companies or in certain agreements it is possible that more advantageous conditions are contemplated.

 

Payroll loans

Payroll loans

Related to the above, many entities offer their payroll customers the possibility of obtaining an advance for several payrolls (usually up to 3), with quite competitive conditions and in a short period of time. Additionally, there are payroll loans if higher amounts are needed, although in this case, the cost is higher and the processing can be a bit slower.

 

Credit cards

Credit cards

Payment of what was purchased with the card at the beginning of the following month does not entail the payment of interest. But in addition, we have the possibility to split the payment, so that we obtain additional financing. This has a high cost that can be between 15% and 20% APR, but which is much lower, as we have seen, than express credits.

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