How does applying for a mini loan work?
A mini loan consists of a small amount that can be borrowed for a short period with a certain percentage of interest over it. Various companies can be registered online for this. This type of loan can be taken out on a very short term, whereby you as a customer often receive the amount within a few days. In addition, different amounts of money can be requested with different repayment terms.
The amount of interest that must be paid on the amount can also vary considerably. Therefore, always read the conditions and rules attached to the loan carefully when you take out this loan. And make sure that you know that you can repay both the borrowed amount and the interest amount within the agreed time.
To give a good example of how a mini-loan works, this text is based on the working methods of the Zaloan and Eicredit websites. However, there are more websites that offer mini-loans and where other conditions may sometimes apply. Both Zaloan and Eicredit are good examples of how it works in general. To apply for a mini-credit and to actually receive it. This is the reason that they have been selected to function as an example in this text. When taking out a mini loan it is always advised to orient yourself as much as possible. And to decide in this way which company you ultimately want to work with.
Advantages of a mini loan
The request for a mini loan is often arranged within 10 minutes. Moreover, you do not have to hand in extra piles of paperwork for this. For example, you do not have to show bank statements or payslips. Some providers will also not include your BKR registration. All you need is a digital copy of your ID card or passport. It is therefore easy to borrow money without income. If your application is approved, you often have the money in your account within 24 hours.
This makes this type of loan ideal for bills that have to be paid in the very short term. And for which you normally have the money. There is also a short repayment term on both the loan and the interest that is charged on the loan. This may seem like a disadvantage, but it can also be seen as an advantage. This way you can get rid of the loan quickly.
The providers of mini loans
There are only a few legal providers in the Netherlands to borrow money quickly. These are all supervised by the Netherlands Authority for the Financial Markets (AFM) and have to comply with certain strict rules. For example, a mini loan may not have a longer term than 3 months and interest may never be more than 14 percent. The mini-loan providers must also comply with the Financial Supervision Act (the Wft).
This means that it is safe to borrow from these lenders and that you as a customer are well protected against abuses. In the past, many of these lenders were not bound by such regulations and your position as a customer was a lot more uncertain. However, this has now been completely resolved.
It is always wise to compare the various providers with whatever type of financial transaction. This can sometimes save quite a bit of money. There are relatively few providers, which means that comparing does not have to take much time. When taking out a mini loan you can, for example, look at the additional costs that are charged on the loan. Almost every provider uses the legally determined interest rate of 14 percent. In the additional costs, however, sometimes a few tens of profit can still be achieved. Always look carefully at the duration of the loan. For example, it is sometimes more convenient to take a shorter duration because lower transaction costs are charged.
It is also useful to check the conditions of a lender and compare them with those of other financial institutions. Many lenders can simply borrow without many conditions. No financial institution will generally make a fuss about possible BKR registrations and the common sense of the customer himself is almost always assumed. However, some other lenders demand something more from the customer. For example, an income can sometimes be requested and some financial institutions have age limits within which they borrow. However, this is very rare in practice.
With almost all providers you also have to be over 21. Only a single provider will accept young people over 18. These are further reasons why comparing providers can yield a lot when applying for a mini loan.
When is the best time to take a mini loan?
With a mini loan you can already borrow a small amount. Moreover, it is a fast form of borrowing money: the application is often quick, since the amount to be borrowed often has to be put on the table quickly. In addition, repaying a mini loan is also necessary within a short period.
That is why it is best to go for a mini loan if you are sure that you can repay the amount and the associated interest within the specified or agreed time. If you have doubts about this, it might be better to see whether a different type of loan would suit you better. After all, you want to solve a short-term lack of money so that you don’t get deeper into debt. However, if you are sure that the amount of money in question can be paid by you within a few weeks, a mini loan is a quick and good solution for your current financial problem.
When do you fall for borrowing a mini loan?
When applying for a mini loan you will not be refused quickly. There are of course some general rules that are observed. For example, you must be a legally mature adult, usually with an age limit of 21 years. Furthermore, the upper limit of 70 years is often used. In addition, financial institutions will not provide loans to you if you have not kept the original payment arrangement with them in the past. In other words, if you have not repaid a lender or have repaid with many problems, they will refuse you in the future. These are actually very logical reasons for being refused and therefore require almost no further explanation.
You have no income
You may not have an income or, for example, as a self-employed person, you may not have a fixed income. As a result, you cannot borrow money from many other types of companies. Since there is no hard guarantee that you actually have the capacity to repay a loan. However, this is not a problem when taking out a mini loan. So you can borrow money without having an income. Your own responsibility is assumed. You as a customer must decide for yourself whether you can meet the set conditions. This type of loan is therefore ideally suited for those who have a good financial overview. And can properly estimate what the future income will be.
You have a BKR registration
With a BKR registration you are registered with the Credit Registration Office as someone who has unpaid debts. The primary focus is on closed loans. In addition, payment arrears on these loans are also recorded. You already have a BKR registration if, for example, you have ordered some clothes on payment from a mail order company, if you have a credit limit in your bank account (in other words, you can see it in red), if you have a credit card or if you have a private lease arrangement have affected. This is generally standard financial behavior and therefore a BKR registration rarely plays a role in applying for a mini loan. This registration is therefore called a positive registration.
A negative registration consists of possible payment arrears. When providing a mini loan, no further positive or negative registration is taken into account. Again, your own common sense and your willingness to pay your loan as soon as possible is assumed. If you comply with these rules, borrowing with BKR is possible.
What about the interest and fees on a mini loan?
In the Netherlands, it has been legally established for a long time that the interest on a mini-loan may not exceed 14 percent. This therefore applies to no matter what amount is borrowed and regardless of the further term attached to this. In addition, a small fee is requested from a number of companies in addition to the amount to be borrowed and the interest. This is legally permitted and is often done to cover any administrative costs. In general, this is about a very small amount.
With a loan of € 100, only half a euro is requested as a reimbursement. This increases proportionally with higher amounts, but for example with a loan of € 1500 it is still only around € 25. In some cases, additional costs may be added to the loan. Always carefully read all the conditions before you actually take out the loan. In this way you prevent unpleasant surprises.
Why such a relatively high interest rate?
It may seem as if a fairly high interest is being charged on these amounts. With most loans, the interest rates are far below 10 percent. However, it is important to bear in mind that this is about amounts that can be paid out in a very short time and that also have to be paid back in a very short time. In addition, the financial institutions that provide a mini-loan require little or no additional information for providing the loan. So it is also possible to borrow the money without having any further income. In other words, both the quick borrowing of money and the borrowing of money without income pose a risk for the mini-loan providers. This can be compensated by asking for a higher interest rate. As a customer you are aware of this in advance and you can therefore make the best decision whether you want to accept this interest or not.
Which amounts and repayment periods are involved?
The amount can vary per company, but in general a mini loan can be taken out from € 100. The maximum is generally between € 1000 and € 1500. This often has to be paid back within a few weeks with the interest. As stated, this interest is set by law at 14 percent.
Sometimes the period can be extended over a certain amount. The same interest amount must then be paid, but a slightly higher reimbursement may be requested. This reimbursement is then often linked to the longer-term period. For example, if you extend a period from 2 to 4 weeks, the reimbursement will double, since you also use a double loan period. Generally, installments run for no longer than 45 days, although with higher amounts, a period of 62 days can sometimes occur.
Some of the financial institutions also offer loans in excess of the aforementioned amounts. This often has longer repayment periods and it is debatable whether these loans still fall under the term mini loans. However, it can be interesting to look at this if you want to borrow a slightly higher amount. Again it is advised to have a good overview of your own finances in order to decide whether your capacity is suitable for this. And make sure that you always read the conditions carefully and that you are aware of exactly what costs you must pay in the future. In some cases it may be wiser to look at a different type of loan. However, you need to make a well-considered decision about this.
How does taking out a mini loan work?
When taking out a mini loan you must submit the application via the website of the company you have chosen. You can opt for Zaloan in the Netherlands. For convenience, we use this lender as an example when explaining how to take out a loan. When applying, it is important that you have a digital copy of your ID card or passport available and the bank account number on which you want to receive the loan amount.
A guarantee must also be provided: this can be done through Global Guarantee or someone from your own environment who wants to act as a guarantor. A test payment of € 0.01 is then requested. This allows the mini-loan provider to verify that the correct bank account number is being used.
After completing the application, the money will be in your account within 24 hours. In the future you can borrow money more often from these financial institutions as long as you have kept to the repayment term. Processing of these payments goes a lot faster. You can then receive the money within half an hour.
Differences between borrowing the first time and borrowing more often
As mentioned above, when borrowing money from the financial institutions discussed here for the first time, it often takes 24 hours before the requested amount is transferred to your bank account. If you become a regular customer, a number of things will change. This way, loans can be deposited into your account within half an hour. Furthermore, you can borrow a maximum of around € 800 the first time. As a regular customer, this amount often goes up. As a regular customer you will also receive an account. There you can, among other things, view your history, change your data and view all information about your loan. You will receive a pin code for this to log in. The period for re-borrowing is very short. Once you have paid the original loan, you can submit a new application.
What is Global Guarantee?
It is therefore possible that you do not have anyone in your immediate environment who can guarantee you. Unfortunately this sometimes happens. In that case you can take out the loan by agreeing to the terms of the Global Guarantee. Read this carefully before you do this. Global Guarantee will act as a guarantor for you and if you cannot pay the amount, do this for you. However, you still have to pay this company, including interest and reimbursement. However, there will also be additional costs that can rise considerably. Therefore, make sure that you do not have to use this. Moreover, there will be costs for choosing this form of guarantee. This is the so-called guarantee price.
Using a personal guarantor
This is always recommended, as it is a cheaper option than using the Global Guarantee guarantor. However, extra digital paperwork will then have to be submitted so that the mini-loan provider in question also has the certainty that this person has agreed to this. You must therefore always be able to provide a copy of their ID card or passport, a copy of a bank statement that is not older than 3 months and a joint and several liability agreement signed by both parties. If, for whatever reason, you are unable to repay the loan and the corresponding interest, the mini-loan provider in question will be able to recover this from your guarantor.
Borrowing at the weekend
It is important to remember that the financial institutions depend on the banks when transferring the amounts to be borrowed. For example, if you request an amount on Friday evening, there is no guarantee that it will be in your account on Saturday. In such a case, it can only appear on Monday, which means that it is not on your account within the promised 24 hours. This is because not all banks carry out transactions during the weekend. Take this into account when applying for a loan. If necessary, you can always first contact your bank to find out how this works for them. There are financial institutions that offer options to circumvent this. Often more information can be requested via the contact page of their website.
Problems with borrowing
If you still have long-term financial problems and close one gap with another, it is advisable to ask your local municipality for help. Often there are Volkskredietbank that can help with both budget management and with debt settlement. They can also advise on issues such as buying behavior that has got out of hand or a strong shortage of income. Asking for and accepting help is a better option than living from wage slip to wage slip or benefit to benefit. With the hope that no unforeseen events will take place or that the current situation will improve miraculously.
Borrowing is only responsible if you have a good overview of your finances and you can actually carry the loan financially.
The benefits of a mini-loan once in a row
Here are the benefits of a mini-loan, point by point.
- You can quickly borrow money within a very short period of time to bridge a difficult financial period.
- Applying for the mini-loan does not take long and no piles of paperwork are required.
- The loan is often paid into your account within 24 hours.
- If you use the loan more often and repaid well, you can borrow even faster.
- Over the longer term, a mini loan is cheaper than, for example, standing in your bank’s red or using a customer card or credit card.
- You do not need a demonstrable income and you do not have to submit a payslip.
- You can borrow a small amount regardless of your BKR registration.
- You pay back the loan, interest and any additional costs within a short period of time, so that you keep a good financial overview and you can get rid of the loan quickly.
The mini loan is a good alternative to a very short-term lack of money. It is especially advisable if you need an amount of money in the short term that you can be sure that you will have after a certain period. There are certainly additional costs associated with applying for a mini loan, but these can be weighed up. As mentioned, taking out a loan does not always have to cost money.
The mini loan can therefore provide a major advantage in the right financial situation. However, closing is only advisable if you have a good overview of your situation and your future income is clear.