Sometimes we go so fast that we don’t stop to think about the pros and cons that our actions can bring. In the case of financing, it also happens to us, especially when it comes to mini-credits. As its amount is smaller, it seems that we are licensed to act without thinking, and it should not be so.
Its simplicity, obviously, is one of its virtues, but we should not take its request lightly. For this reason, in this article we review the advantages it brings and the dangers that mini-loans entail.
The 3 virtues of mini-credits
We start with the good things. These are three of the main advantages that this type of financing offers us:
- They can be free! It is one of the great claims of lenders in this sector. In many cases, the first request for new clients gives the option of not paying interest. In other words, we must only return the money that we have received at first in the agreed period.
- They are fast, very fast. It is usually the first thing that comes to mind and is another of its main attractions. When we need money immediately, they are almost the best option. Some companies allow us to have the requested amount in our account in just 15 minutes from when we request it.
- Flexible requirements. To get this type of loan, we must show that we have income, but logically, the requirements in this regard will be less than when we request large amounts. Although our payroll is not very high, we can get the money.
These are not the only advantages they pose. The fact that the procedures are online, that there is hardly any documentation to deliver or that they are very transparent (we will always know how much we are going to pay and there are no links), are other virtues.
The 3 dangers of mini-loans
After the good things, it is time to review some of the questions that we must keep in mind when applying for a mini-credit if we do not want its use to become a negative experience:
- They are paid at once. The maximum return period usually lasts up to one month. This means that, after 30 days, we must repay the money borrowed together with the interest generated. When it comes to small amounts, the problem is less, but if we talk about loans of up to 1,000 dollars, it can be difficult to pay them back at once.
- Default interest. If we cannot pay the mini-credit within the agreed period, we have two options: request a postponement (with its respective cost) or enter into delay (whose cost is more expensive than the extension). To avoid this situation, we must ensure that we can return the money on the date set by the contract.
- That it becomes regular financing. We must avoid this situation however. Instant mini-credits should be used to respond to specific and urgent expenses, they should never be used as a regular financing system. Their high interests cause that there are other more recommendable options.
Having these three elements in mind before applying for a loan and while it is alive can be a guarantee that the financing will have a satisfactory result.