Small loans can be a broad concept, but when it comes to loans on the net, they range from DKK 100 – 50,000. Many may not consider DKK 50,000 as a small loan, but that is the case for most loan providers. There are many names for the smaller loans: Micro loans, SMS loans, Mobile loans, Minilån, Quick loans, just to name a few.
Small loans online have become a trend
It has become probably popular to borrow money through the web and the popularity is increasing. While in 2010, short-term loans were raised on the net for DKK 37,828,500, corresponding loans were raised for DKK 527,317,119 in 2015. Of the 172,485 loans granted in 2015, 12.1% were defaulted. Figures from the Consumer Ombudsman 2017.
It doesn’t matter which loan you take – the loan must fit both you and your situation. It doesn’t help you take a loan you can’t pay back. Nor do you use a loan to be repaid in 3 months if you first have the money of 6 months.
Here is a brief description of the different types of loans that come under the concept of small loans:
Short-term small loans
The short-term loans are those that are critically referred to by politicians and the press. Here they are mistakenly called “quick loans”, which is a much larger concept. There are several who offer smaller loans with short maturities. You can typically borrow from DKK 100 – 15,000 which must be repaid within a foreseeable time frame.
Some loan providers offer short-term loans of 14 – 30 days, while others have maturities of up to 12 months. In January (2017), a new law on short-term loans came into force. The law applied to loans with a payment deadline of 90 days or less. Broadly speaking, the law went on to delay the disbursement of these loans by two days. The law hit only a few providers and has proved to be almost ineffective. Now there is talk of a new law that must limit how high the APR (Annual Cost Percentage) must be, which would be a much more effective solution.
Short-term loans have a high APR
The small loans with short maturities have a very high APR. It is in itself a little misleading, as you do not need information about what the loan costs over 12 months when you only need it for 30 days. In fact, most short-term small loans can easily withstand, for example, comparison with eg. an approved overdraft in the bank.
While the bank calculates a plausible fee to provide the credit, it is likely the interest rate is high at the online short-term provider. It is not abnormal that the monthly interest rate corresponds to the annual interest rate on a regular loan. Which can make it extremely expensive if you default on the payment deadline.
While SMS loans are largely non-existent, the concept has a good grasp of the population. While SMS loans previously largely correspond to short-term small loans, the concept today covers loans that can be raised via the mobile phone, which applies to the vast majority of online loans. The reason for the SMS’s great popularity was that it was easy, quick and virtually anonymous to borrow. The reason why very few offer actual SMS loans today is that security is not at all up to date. Today, security is extremely high when you borrow over the net.
The concept of mobile loan has not been in the same way as SMS loans. This was mainly due to the development of the Internet. While it was quite a few who had access to the network in 1990, virtually everyone has access today. All loan providers have websites adapted to the mobile phone, so you have access to all online loans via your mobile. You can therefore borrow from a few hundred dollars up to several hundred thousand dollars via mobile.
The mini loan belongs to the most popular group of online loans. While Minilån was previously a loan of up to DKK 10,000, the concept has developed quite a bit. Today, Minilån covers loans that range from approx. 3,000 – 50,000 DKK The previous maturity of 12 – 18 months has also been stretched a great deal: The maturity of the Minilån loan is today up to 80 months. If you apply for a Minilån, you will receive an answer immediately or within 1 hour and the money is preferably transferred to your account the same day or the next day – depending on when you apply.
Quick loans are loans where the loan procedure is both easy and quick. All of the above loans fall within the term Kviklån. The loan amount for Mortgages rises steadily. Today, with some loan providers you can get Kviklån up to 200,000 kr.
While mortgage loans are incredibly popular in the population, they are similarly unpopular with politicians, the press and the consumer council. However, the criticism goes solely to a very small part of the category of quick loans, namely the short-term small loans.
Larger loans, loans up to DKK 400,000 – DKK 500,000 are increasingly taken up via the network. As with the previously mentioned loans, you do not have to agree time and meet up at the bank to take up these consumer loans. You fill out an online application, get an answer right away and if you accept the loan offer, the money is ready within a few days.
Get the best loan
Common to online loans is that you get a free and non-binding loan offer. If you are looking for several different loans / loan providers, you can compare the offers. You have a greater chance of finding the right loan if you are looking for 3 – 5 different providers and choose the loan that best suits you and your situation.
In particular, pay attention to fees. Unlike interest, fees cannot be deducted from the tax return. A loan with high fees and low interest rates can therefore be more expensive than a loan with a small fee and a higher interest rate.
It is also a good idea to look at the total costs . That’s what the loan will cost you. The total cost must be stated in your loan offer!
ÅOP (Annual Cost in Percentage) you can only use to compare two similar loans – that is, loans with the same loan amount and the same maturity. The APR also does not tell how much there are fees and how much interest there is.
You have 14 days of cancellation right when you borrow online
When you borrow via the net, you have 14 days of cancellation right. The right of cancellation applies from the day you receive the final loan documents. If you regret your loan, you must inform the provider within 14 days that you have regretted. The loan must then be repaid within 30 days. A possible fee will be returned to you while you pay interest for the period.
Why get a small loan?
There may be many reasons why you want a small loan. An Emergency: Your bike is stolen: and there are 8 days to pay day. An unexpected expense: The washing machine has broken down, your dog needs a vet, you had forgotten the day / father’s day, etc. Whatever you want a small loan, it is a good idea to consider your need and your options.
Is it necessary to borrow?
Sometimes you want to burn something, just to find out that you could do without it. Many have clothes or shoes in the wardrobe that they never go with or electronics in the drawers that are never used. Everything you wanted to burn – and you could have done well without it.
Can you borrow from family or friends?
It is not free to borrow from banks or from loan providers. It would be cheaper if you could borrow from a family member or a good friend. It is not always a viable solution – but worth considering.
Make Money From A Small Loan!
There are situations where you can make money by taking a small loan. Eg. If you can save money shopping here and now. For example, if you is saving up for a new flat screen and falls over a good deal on this particular flat screen. You may save DKK 2,000 if you shop now! Here you save far more than the cost of a small loan is.
Where do you borrow a small amount?
There are few who want to involve their own bank when you just have to borrow a small amount. Fortunately, the net abounds with offers for small loans. There are so many online loans that it can be difficult to overlook the many opportunities.