Small loans mostly differ in terms. This includes not only interest rates, but also other factors play an important role in the question of when a loan is cheap and when it is not. The characteristic of small loans is the low loan amount. The banks grant a small loan from as little as USD 1,500.
Small loan with favorable conditions
A cheap small loan also differs in terms of term. Even with a small loan amount, terms of 12 to 84 months are not uncommon. The interest is calculated depending on the creditworthiness. Advertising with a low interest rate does not mean that the borrower will get it. Another criterion for a small loan with favorable conditions is that the first installment is only due after 89 days, as is the case with Agree bank, for example. Special repayments are also possible at any time.
Why apply for a small loan at all?
With a small loan, wishes can be fulfilled that do not cost a lot of money. This can be a new sofa or a new PC. There is often a lack of money for new acquisitions, which is why only a small loan is possible. Even if the loan amount for a small loan is low, the applicant must also meet certain conditions here so that a small loan is also approved by the bank. Only people who are 18 years old can apply for it. Applicants must also have a permanent job. The last three salary or wage slips serve as proof. Negative entries in the Credit bureau make a promise impossible.
Use the overdraft facility in the checking account
It can happen that the loan can be repaid within a short time because the borrower expects money. This can be, for example, the Christmas bonus or the vacation bonus. If the money is only needed for a few months, it makes sense to use the overdraft facility on the checking account. It is more expensive than a small loan with favorable terms due to the high interest rates, but using the overdraft facility saves you having to talk to the bank advisor or applying for a loan from an online bank. A disposition can be called up at any time and without prior consultation if it is not yet exhausted.