What are Micro loans? Know them in Depth

Microloans can help you in those situations in which you have ever felt a little just when certain unexpected expenses have appeared. Who has not happened? A wedding that leaves us tight during the whole month, a momentary offer that you could not miss, the school books of your children or a breakdown in the car.

For these situations, there are many people who pull a credit card. However, many others are discovering online micro loans. Do you know this financial product?

What are micro loans?

What are micro loans?

Micro loans are a relatively recent form of financing that has taken a lot of force in recent years. In part, their popularity has been due to the benefits they offer. Microloans can be obtained from home, online and without having to justify why you have to use that money.

Many times, you can even have the amount in just 15 minutes. The concession term never goes beyond 48 hours, since they are ways to acquire immediate liquidity. On the other hand, it is easy to return the money, since you can choose the term, so that the interest will adjust to the period you have selected.

Myths of micro loans online

One of the most widespread myths of online microloans is that they end up being expensive. If you select an amount that can help you meet your needs and return the money within the indicated period, not only will you get out of a hurry, but it could also help you save.

But it is true that, despite its advantages, microloans are not at all recommended for those who believe they can not return the money. Do not forget that they are granted for specific needs and that they have costs similar to other forms of loans, but with smaller amounts and with a lot of bureaucratic agility.

Because of its speed, its simplicity and convenience, as well as its practicality and the security it provides to those who request it, online microloans are increasingly in demand. We tell you all its characteristics so that you leave fears and doubts behind if you have a sudden fix.

Main characteristics of online microloans

Main characteristics of online microloans

First of all, and as we already know, they are personal loans that you can get quickly. In addition, they are granted in a short period of time. There are even companies that only take a few minutes to put at your disposal the amount you want to get with your microloan.

In general terms, we could point out that its main characteristics are the speed of the concession and the request, its low amount and the speeding up of the procedures to be carried out through the Internet. In addition, it does not require too much paperwork, because normally you only need your DNI to prove your identity and your residence, as well as a regular income that does not have to come from a payroll. They can come from a scholarship, a pension, etc.

In turn, the amount of online microloans usually ranges between € 500 and € 750. The process to make the request is carried out online. The return period will normally be 30 days, and you do not need to justify what you are going to use your money for.

Advantages and disadvantages of online microloans

Advantages and disadvantages of online microloans

1. Speed

The first of its advantages is that they are granted very fast. This is ideal if the reason you request it is that you have to face unexpected payments that prevent you from reaching the end of the month. For example, paying the insurance or having the need to make a sudden reform. The second main advantage is that, if it is the first time that you request it, the terms and interests will be more advantageous.

However, what could be considered a disadvantage is that, if this is the first time you are applying for a microloan, the concession process may take 48 or 72 hours. But it does not have to be this way, nor is it always like this. Simply, it is something that could occasionally happen, because the entity has to verify your personal data for the first time. Of course, the next microloan you request you can get it in just 15 minutes.

2. The requirements of micro loans

In turn, one of its most attractive benefits is that the entities that grant them are not very hard with the requirements. There are not too many that are requested. The traditional loans of the banking entities may require excessive conditions: payrolls, rents, justifications and all kinds of supporting documents. With online microloans this does not happen, the process is very agile and almost anyone could get one.

If you want to access an online microloan, you really need to meet very few requirements. These requirements and conditions are basically: that you are of legal age, that your habitual residence is within Spain, that you have a mobile phone and an email and, finally, that you have an account at the bank, which is where you will send your money. According to the issuer of the credit, the rest of requirements could vary. But there are usually not many more.

3. You do not need to have a payroll

We must also point out that there are many types of microloans. The main reason is that they intend to adapt to the different needs of each person. Which implies that there are, for example, some for students, others for self-employed and others simply focused on personal financing.

However, the common advantage that stands out in all the modalities is that you do not need to have a payroll to request one, unlike what happens in traditional banks. The microloans are mainly for unemployed people or pensioners, so the only thing they ask you to prove is that you have a regular source of income. And this income can come from a pension, the amount of unemployment, etc.

4. You can request them if you are in Financial credit institutions

A very attractive benefit for many people who want to be granted microloans is that there is a modality for people who are in a situation of Financial credit institutions or other similar listings. For the granting of online microloans, the fact of not being in Financial credit institutions is not a requirement.

You only have to offer guarantees that you have a more or less regular income, as we have mentioned: those of a pension, those of a scholarship or those of the unemployment benefit would be sufficient. That is, you have to demonstrate a certain solvency.

However, there are also online microloans that are free. That is to say, that the first time you request them you can acquire them without having to pay commissions for it or even without interest. Of course, the fact of not having interests will imply that the return period is shorter. Otherwise, interest could skyrocket.

5. High flexibility

The flexibility for the return is very high. But keep in mind when selecting the return term that you wish the interest could trigger. It is useless to put a shorter return period to get better conditions if then you will not be able to return it.

In that case, the interests will end up being much greater than if you had just selected a longer term, and could end up becoming disadvantageous for you and your pocket. Make the calculations that are necessary based on your expenses and your financial needs before requesting an online microloan.

In turn, in relation to this flexibility it should also be noted that you can return the money before the return date you have indicated in the application. Many people want to settle their debts as soon as possible. Others, in addition, fear that if they do not do so they will spend that money on something else they need before the loan repayment date.

There is no problem about it. If you want to avoid misleading or take away the burden of having to repay a debt, you can do so as soon as possible. Online microloans allow it. However, you must be very clear that the fact of returning it before will not mean that interest will be reduced. You must bear in mind that the interests are agreed by contract. Therefore, from the date of grant until the day when the term expires, the interest rate will be the same.

6. Your data will be confidential in any case

The data that contributions will always be confidential. No one but you can know that you have requested an online microloan. The entity is obliged to treat your data in a very efficient and confidential manner. Otherwise, the General Data Protection Regulation (RGPD) imposes high penalties, and you can even get constitutional protection. Therefore, you can keep your anonymity.

7. Less justifications in your expenses

When you apply for a microloan online you do not need to justify the expense you are going to make with it. This is undoubtedly one of the advantages that many applicants consider optimal. You will not need to say what you are going to use it for, nor provide any information about it, since its use is irrelevant to the entity that is going to grant you the loan.

8. The procedures

The last aspect to point out is that of the procedures. You can process the entire application from the Internet without having to leave home. This product allows all processes to be streamlined and avoids bureaucracy, being able to process it telematically from its inception to its expiration.

In this sense, we have to point out that almost everything is advantageous. There are no queues and you do not have to move from home. If there is a disadvantage, this would be that, by not being face to face, the possibility of negotiation becomes more difficult. However, microloans already offer very advantageous and beneficial conditions for the applicant, so this negotiation is not necessary either, as it could happen in the case of a loan from a traditional bank.

Some issues you should consider before requesting microloans

Some issues you should consider before requesting microloans

Although, as you have seen, there are not many disadvantages of online microloans, it is necessary to take into account some warnings if you do not want to take unpleasant or unexpected surprises:

The interests

The first of these issues is that interest has a somewhat high cost. That is to say, the fact that they ask for less supporting documents or that they do not ask for a payroll, in some way must be solved in another way. That other way is the interests somewhat higher than those of a traditional loan.

Also these high interests are the way to assume the risk of default so high that these companies have with some of their clients, because they allow the granting of credits even for people who are in Financial credit institutions or in similar lists of defaulters.

The over-indebtedness

There are some people who have come to suffer from over-indebtedness due to these loans. It does not have to happen to you, rather the warning is that you do not request more than what your pocket is going to allow you to pay later. There are people who have a somewhat weak economy and use online microloans to plug holes.

The problem would arise if you then ask for another loan to cover a part of the previous one, creating a continuous chain of debts. Actually, the notice we are making in this section does not fall on these financial products themselves, but we are recommending that you make a series of calculations before requesting them to suit your personal economy. We also advise you to use it in a responsible and common sense way, to avoid future unpleasant situations.

In short, micro loans are a type of financial product that can be very useful to solve momentary economic difficulties that arise in a timely manner, or as a lifesaver if you are at a time when your economic situation hangs in the balance. They also serve a lot if you want to give yourself that whim you’ve been wanting all your life. It does not matter what you use it for, but remember to always do it responsibly and not request more than you can assume.

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