Differences between microloans and consumer credit


Introduction of micro loan

A microloan is a loan or loan of money that is provided for a small amount of money, usually up to $ 5,000, has a short maturity that ranges from one week to several months. Loans are provided by non-banking institutions that are on the market, as is a wider portfolio of loans offered by these institutions. For easier orientation in these products, there are graders such as Loanget, where you will find a clear comparison of all available products, basic information and their parameters, a link to the provider and the possibility to fill in a loan application online. As we have a large number of micro-credit companies on the market, there is a lot of competition, and so these loans are getting more and more advantageous for citizens. Companies are competing to give people the best possible conditions. Loans are also granted to people with less repayment, without proof of income, no guarantor or no co-applicant, you are approved within a few minutes, and you usually get the money within a few hours, non-banking institutions work outside normal business hours, so you get even in the evening hours, weekends or holidays. However, all these benefits are redeemed at higher interest rates and higher fees.

For whom the microloan is intended

The micro loan is easy to get, and you can get it:

  • with a registry entry
  • without proof of income
  • retirement and maternity leave
  • if you have an outstanding loan from another company
  • in cash and on account

Based on this statement, we can say that this is a loan that is for everyone, especially for those who demand money quickly, safely, comfortably and easily. It is intended for people who do not require a high amount and need a short maturity, so the loan is quickly repaid. It is suitable for people who would not have a chance to obtain a loan from the bank, whether because they have an entry in the register or because they have low incomes, they are mothers on maternity leave, retirees, people in execution, people who already borrowed from other companies.

In what cases do you take a micro loan?

  • You do n’t have the money to pay – whether you simply don’t go out with the monthly budget, you don’t get the expected amount of employment or you’re sick and need money to cover the missing amount, the reasons may be a few
  • Unexpected Expenses – A car or home appliance can break down day by day, and if you don’t have a side-by-side deal and need to deal with an immediate repair or replacement, you can borrow, either the entire amount or just the missing part, there are things to deal with immediately
  • you have an entry in the register or execution – it will not lend you anywhere else in any institution, but you need some less money to cover unexpected expenses;
  • you are a mother on maternity leave or a pensioner – you do not need proof of income, no co-applicant or guarantor
  • speed – do you need money immediately? There is no problem for private institutions
  • convenience – are you in one round and don’t have time to waste your time running around offices or institutions? You can solve the micro loan from the comfort of your home, via the Internet, SMS message, or a company representative will come to you, you don’t have to go anywhere.

Advantages of microloans

  • Speed – Whether it is a review of an application that lasts up to 20 minutes or a quick payment of money, whether you choose a cash loan or a bank transfer, you have money within a few hours of your request, many institutions work on weekends
  • convenience – you don’t have to go to a branch to get a loan, you don’t even have to go through filling out a questionnaire with a sales representative, now most companies will simply lend in a few minutes from the comfort of their home via the internet
  • Accessibility – People who would never have any chance at the bank, whether in the registry or in execution, will also have access to this short-term loan, given that loans are not regulated and provided by private institutions, so they are approved by almost all people
  • Great Choice – Given the great competition that is ahead of providing the best possible products, you are getting low-credit, low-cost loans and fees
  • Documentation – Companies do not require you to document a heap of documents and you usually do not have to prove your income
  • guarantor – yes, short-term loans usually do not need any guarantor or co-applicant
  • Short maturity – usually from one week to one month, you repay the loan very quickly, the faster, the less you pay on fees and interest
  • easy comparison of offers – thanks to Loanget you do not have to find individual companies’ bids easily, you can find all important information in one click

Disadvantages of microloans

Disadvantages of microloans

  • usually only a few thousand crowns
  • short term – very short maturity, usually around one month
  • High interest and fees
  • higher overpaid amount
  • High repayment charges
  • The risk of borrowing from the usurer

Basic information about consumer credit

Basic information about consumer credit

Consumer credit is provided by both banking and non-banking institutions and is very often subject to the acquisition of a particular thing or service, such as a mortgage. This is probably the most profitable way to get money on the market. Mostly, however, you don’t need money for one particular thing, but in short you need to borrow money, in such cases banks provide non-specific consumer loans, have a higher interest rate than the target, but the bank will not ask you to document how you spent the money. You do not guarantee real estate or any other movable property if you need to borrow a smaller amount of money (less than 100,000, – CZK), so you probably do not need a guarantor or co-applicant. Since they are banking institutions, you need to fill in a larger number of documents to get a loan, and you must have all your income documented. In the case of a loan without a guarantor, you must be a client who has a payment history with the bank, ie. money goes to your bank regularly.

We divide loans into three types by maturity

  • short term – with a maturity of up to one year
  • medium term – maturity is 1-4 years
  • long term – maturity longer than 4 years

Who can apply for a consumer loan

Who can apply for a consumer loan

Getting a consumer loan is not easy, every bank has its own individual conditions that you have to meet. In general, however, anyone who can:

  • is a natural person over the age of 18,
  • has Czech citizenship and permanent residence in the Czech Republic
  • In addition, some providers require the borrower to have a bank account with them.

Advantages of consumer credit

Advantages of consumer credit

  • get the necessary amount of money relatively quickly, without the need for savings
  • almost anyone can ask
  • gradual repayment – you can repay the loaned amount for several years divided into smaller amounts

Disadvantages of consumer credit

Disadvantages of consumer credit

– you pay more than you borrow, you pay extra interest and fees

– the need to prove regular income and its amount

– it takes several days to process

– Banks require a lot of documents and confirmation

– Often you need to guarantee property or get a guarantor or co-applicant


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