The mini- credits, or microcredits, are a type of personal loans that are characterized by their quick grant, with hardly any paperwork or requirements (many lenders grant them even if they appear on unpaid lists, such as Financial Credit Institutions). The repayment terms of these mini-credits are usually very short, most of them allow you a term that ranges between 5 and 30 days, which normally causes the Annual Equivalent Rate (the sum of the total cost of the loan), to be higher than in long-term loans.
If we are thinking of requesting a mini-loan, it is important that we assess its virtues, its inconveniences and that we will compare the minimum conditions required when requesting a “traditional” loan and the requirements necessary to obtain a mini-loan. In this way we can assess with greater criteria which option is the most appropriate according to our needs. According to the Bank of Spain, the advantages and disadvantages of fast mini-credits are:
Speed: in most lenders, you can have the money the next day, and even the same day
Flexibility to return it: the term is indicated by you, depending on the date on which you can return it
Simplicity: the online mini-loan is usually requested, so you don’t need to leave home
Without paperwork: the ID card, a payroll (or proof of income), and a bank account are usually sufficient
For mini-credits there are usually no opening or study fees
APR (total cost) higher than in long-term loans
The penalties in case of default or delay are usually higher (although this depends a lot on each lender, so it is mandatory to check the conditions of each before accepting it)
So … yes mini-loans or no mini-credits? At Sergeant Puff, we believe that mini-credits are designed for specific moments of lack of liquidity, not to be financed in the long term, to pay other loans, to settle gambling debts or to be used repeatedly.
In short, before hiring a mini-loan: compare the conditions and possible penalties, read the contract, understand the obligations you assume when accepting it and make sure that you will be able to return it and that you are not over-indebted.