Why do people take quick loans?

Best Lender found an old survey that was done by the Swedish Consumer Agency and the Kronofogdemyndighet using the community site Playahead (which is now closed). The survey was made 9 years ago, shortly after the fast loans began to emerge in the market, and you actually become a little dark when you read it. Among other things, it showed that almost a quarter of those who took sms had debts with Kronofogden, but thankfully it doesn’t look like that at all today.

Of course, in recent years it has been found that some have managed to borrow money despite having had debtors’ debt, but it should not be. The lenders who grant quick loans to debtors now have to pay a penalty fee to the Swedish Consumer Agency for this and in addition they receive a warning and can be forced to close down their business. This, of course, has meant that the fast-loan companies that want to be able to continue to operate in the market do not grant fast loans to debtors now and that is of course good.

What does it look like today?

What does it look like today?

Much has thus changed since the Swedish Consumer Agency and the Swedish Crown Securities Agency’s examination of sms loans, as the rules on fast-mortgage companies have been sharply tightened in recent years. Therefore, there is no reason to make any kind of summary of the survey because the results do not at all match what it looks like today.

Nevertheless, there are some interesting facts in the survey that Best Lender believes are fully relevant today and that is why people take quick loans and what the money is used for.

1. You get the money right away

1. You get the money right away

Yes, getting your money right away was the biggest reason why people took sms loans according to the 2007 survey. This is in good agreement with Best Lender’s own experiences and analyzes. It is not really that strange, since it usually takes several days to get a regular private loan.

2. It is easy to apply

2. It is easy to apply

We have long understood that the flexible application procedure for fast loans makes many people choose to take such a loan. Nine years ago it was usually done via sms which was then considered smooth but applying on the lender’s website is even smoother. A big advantage of this is that you can clearly see what interest rates, fees and conditions apply when applying online, which is also something that has improved significantly over the years. Besides, it is not particularly difficult to apply for private loans online today.

3. Low requirements

According to the 2007 survey, the third biggest reason for people taking sms was that the sms lender did not look closely at what the applicant’s finances looked like. That is not exactly the case today, although there have been some fast-loan companies in recent years that have not really taken care of this point and they have received reprimands as a result. Today is probably the third strongest reason instead that the fast mortgage companies usually have significantly lower income requirements than the banks have.

4. Nice to avoid personal contact

4. Nice to avoid personal contact

9 years ago you usually had to go to a bank or at least talk to a bank by phone when applying for a loan, then a paper contract would be signed. Therefore, many people felt it was more convenient to apply for a sms loan because then you were not asked by the bank. Of course, this may be the case today, but the fact is that there are lots of private loans you can apply for without personal contact.

In any case, many people still think it’s nice to avoid having a bank or a credit company when they want to take out a loan.

What is the money used for?

What is the money used for?

The Consumer Agency’s survey from 2007 showed that 38% of borrowers used their sms loans to pay their current bills, about 30% used the money for such things as clothing, electronics and other things and 19% paid off other loans with it. We have not been able to find a similar statistic for what it looks like today, but you can at least divide those who lend money into three groups when it comes to fast loans:

1. Those who lend to succeed

Of course, there are people who find it difficult to get their finances together, but who do everything to avoid ending up at Kronofogden and therefore take sms.

  • You borrow to pay off on other loans.
  • You borrow to clear your current bills.
  • You borrow to have food on the table.

Of course, this is not good at all and usually it makes the economy even worse. So what to do then? Well, you can find out by reading our articles on how to avoid debt and how to get out of debt.

Please also read our blog article that it is sometimes better to let a debt end with debt collection or Kronofogden directly instead of waiting, no matter how bad it sounds.

2. Those who lend to unnecessary things

There are many who are in debt indebted and who are irresponsible with their finances. For example, you lend to:

  • Partying, gaming and other entertainment even though you can’t really afford it.
  • You borrow for impulse purchases. So you want to buy something with borrowed money and then there is a risk of regret.
  • Unnecessary consumption in general. So you buy a lot of gadgets that are not vital even though you can’t really afford them.

3. Those who borrow for a good reason

3. Those who borrow for a good reason

Yes, there are actually good reasons to take quick loans, for example in the following situations:

  • You see that what you decided to buy after you got paid is sold out. For example, if you intend to buy a new computer for USD 7000 which only today costs USD 5000, you will actually benefit from paying it with a quick loan instead of waiting, even if you have to pay USD 500 – 1000 for the loan. Otherwise, there are actually free sms loans with no interest and fees, so if you take such a loan you save USD 2000. But pay back the loan on time!
  • Your car breaks down and needs to be repaired and you can’t do without a car. Then it might be good to cover all or part of the repair costs with a fast loan.
  • You have a hard time paying a bill with it being just a one-off phenomenon and you know that you can pay back the quick loan after the next salary only if you start to skimp a little.

Particularly cheap loans are waiting for you

Due to their profession, civil servants have good to very good credit ratings. This is rewarded by banks with cheap offers. Many finance companies today offer a special loan for civil servants.

It can be compared to a civil servant loan and is characterized by low interest rates, long terms and high loan amounts. It is offered by both branch and direct banks. The low-interest loans can be conveniently applied for from direct banks on the Internet.

At branch banks, they are bound to a consultation. The interest rates associated with the loan for civil servants fluctuate. They mostly depend on the term and the amount of the loan. There are some offers where the interest is tied to creditworthiness.

Planning security through long fixed interest rates

Planning security through long fixed interest rates

One advantage of the special loan is the long fixed interest rate. It is achieved through terms of 12 to 20 years, which are not uncommon with these types of financing. Due to the long fixed interest rate, borrowers have optimal planning security. During this period, interest rates are stable and are not subject to any cuts or increases that may result from economic changes for the borrower. The loan amounts offered for the loan for public servants range from 500 to 200,000 USD.

Thanks to this wide range, the financing is suitable for both investments and debt restructuring. Special loan offers for public servants and civil servants are also available for the purchase of residential property. With regard to the conditions, they differ from the classic civil servant loan.

Installment loan creates clarity

Installment loan creates clarity

The loan is usually offered to public sector employees as an installment loan. As such, it is known to borrowers in terms of structure. The repayment is made in monthly installments, which in addition to the repayment portion also include interest and any other fees. At the end of the term, the loan amount is mostly paid off in full. Alternatively, such a loan can also be offered as a life insurance loan. In this case, the loan is supplemented with a capital-forming life insurance.

It serves the repayment. In this model, repayment is made by a one-off payment at the end of the term. The sum insured is available for this. With regard to the term and the amount of the loan, insurance and credit are optimally coordinated. If capital life insurance generates interest and surpluses, these are paid out to the policyholder at the end of the term after the loan has been successfully repaid. Overall, the loan for civil servants is significantly cheaper than other loans. It is also characterized by its flexibility and can be conveniently applied for online. Many direct banks offer telephone advice.

Problematic sms loans?

We know that the media is distressed and complains about how many people take sms. They believe that interest rates are too high and that people who really shouldn’t have received a loan are allowed to borrow and this means that tens of thousands of cases end up with the chancellor. We only partially agree with this. Interest rates are probably not the biggest problem if you only borrow a few thousand dollars, but if you take a large sms loan the interest rate is of course too high

Because of highest ineterst rates

Because of highest ineterst rates

Rather, we believe that it is the short maturities in combination with the high interest rates that are the biggest problem with sms loans. It is not always easy to pay back maybe 5000 – 10000 after just a month and if you put up the loan for longer than 3 months, the loan becomes way too expensive. This is why Lite Bank presents some inexpensive alternatives that have longer installment times and lower interest rates than typical sms loans.

So whose fault is it that sms, or fast loans, have become so popular? Is it the state’s fault for not banning them? Is it the borrowers fault? No, we would rather say that it is the banks’ fault, because most banks have not really kept up with the development and seems to think that the 20th century has not ended yet.

Look at the situation behind the note

Look at the situation behind the note

First, they use a credit model that we do not really think belongs in the 2010s. They look far too much into the applicant’s history instead of focusing on the present. If applicants have payment remarks, it is usually completely run, then they do not even look closely at the case but the applicants are rejected directly. It would have been much better if they were trying to find out why applicants have received one or more objections. Was it because the person became unemployed or on sick leave, or was it because the person simply ignored paying their bills even though he or she could really afford to pay?

If the person simply ignored paying his bills despite decent finances, the bank should of course not grant any loan, but if the person suffered a temporary financial weakness but is on his feet again, old payment notes should not matter.

But this is rare, the banks give red light as soon as they see a note and that means that people with comments rarely have any choice but to take sms if they need to borrow money. If the banks had not been so tough, they would instead have been able to take a cheap private loan that they could put up in any year, and then fewer cases would have gone to the bailiff.

Temporary employment should not always be an obstacle

Temporary employment should not always be an obstacle

Secondly, almost all banks require permanent employment (until further notice), especially when it comes to unsecured loans. Today, there are over 3,600,000 people who have permanent employment, but over 720,000 have a fixed-term employment and this figure is constantly growing. Many of these temporary jobs are extended over and over again, so you might think that more banks could take this into account.

If applicants have had fixed-term employment for several years without interruption, then it is thought that the banks would be able to grant at least smaller private loans of maybe USD 5000-30000, which must be repaid before the last employment ends. But not then, unfortunately, there are few banks that do this, which means that people are forced to take more expensive loans instead.

There are sensible alternatives to bank loans

There are sensible alternatives to bank loans

Thankfully, at least there are some lenders who offer loans of USD 3000 – 50000 with several years of maturity that do not require any permanent employment and which accept payment remarks. Their interest rates tend to be somewhere between about 10 – 33%, but it is still okay compared to the sms interest rate. The interest rate is higher than for ordinary private loans precisely because the lender accepts remarks and temporary employment which means that the lender takes a greater risk.

You will find several lenders that offer reasonable alternatives to both bank loans and sms loans under private loans.

If the banks had not been so rigid and more banks could think of accepting temporary employment and remarks at a slightly higher interest rate, they would have taken a lot of market shares from sms lenders, but it is obviously not interesting.

Loan for self-employed for debt rescheduling

The loan for the self-employed for debt restructuring has its own laws, as it differs significantly in the way it is calculated and also how the loan amount is used from retail and consumer loans.

First of all, the loan amount is not used to increase the total liabilities, instead existing loans are either redeemed at a new, lower interest rate or the term is extended – in order to get financial air for investments and more. There is also no classic proof of income in the form of a wage slip. Instead, this information must be able to flow into the credit calculation and credit check via a detour.

The function of business evaluations and tax assessment

The function of business evaluations and tax assessment

For the lender, there are two challenges with the loan for the self-employed for debt rescheduling: On the one hand, self-employment offers significantly higher chances of generating growing income and taking advantage of the opportunities offered by the market. On the other hand, many companies have a very pronounced seasonal pattern, so that a bank statement over a month would not really be meaningful. Instead, the bank’s corporate customer advisors or the credit department use other documents: These can be the business evaluations and figures that the tax adviser has compiled or the tax assessment of the previous year.

Since nobody knowingly wants to pay too much tax, the latter document is a rather conservative confirmation of sales and profits. In addition, the current account statement can be used for the loan for self-employed for debt rescheduling in order to get an overview of the amounts received on the “credit” page of the account.

Does a self-employed loan make sense for debt restructuring?

Does a self-employed loan make sense for debt restructuring?

This loan is a relatively difficult type of loan to consider. The reason for this is that the motives for using it are completely different. On the one hand, the loan can be used to replace a comparatively expensive corporate customer disposition and thereby save interest – which should have a favorable effect on the company’s cost burden. On the other hand, the rescheduling can also be a sign that the previous monthly installments have been too high and that the entrepreneur therefore needs a little more “air” to pay off.

All of this requires a thorough analysis, which is why this type of loan is not available for immediate payment via an internet portal. You can usually start a comparison calculation for this type of loan there, but the lender’s corporate account manager will in any case seek contact before the loan amount is released.

Cheap instant loans compared

With a loan calculator you can find cheap instant loans in comparison, so that you can ensure that the loan application is checked by the bank within a very short time and that the loan amount is paid out as soon as possible if the check is successful. Immediate loans are a special form of credit here, although they do not differ in payment from conventional installment loans.

Immediate loan

Immediate loan

The difference here is the processing time of the loan application and the time until the payment. Immediate loans are particularly suitable if you urgently need the loan amount applied for, as you can usually book the money into your account after a maximum of 72 hours. As a result, you should ensure that if you apply for a loan, which you can also submit immediately after the comparison, you must also send all the necessary documents to the lender in their entirety.

If documents are missing or if some information is incorrect from the perspective of the lender, there may be further delays, since the lender must first clarify the situation and the further procedure with the borrower. In any case, you should always compare cheap instant loans in comparison in order to actually find the cheapest lender for your special wishes in terms of term and loan amount.

Quick money to pay off debts or to do business

Quick money to pay off debts or to do business

For which reasons you choose to take out an instant loan option remains with most lenders your secret. Immediate loans are often applied for in order to settle further debts as quickly as possible through outstanding liabilities, high reminder fees or overdrafts. This is also advisable, as debt that is not paid on time or a minus in the checking account can quickly lead to high additional costs. Then, in an emergency, it is much more economical for those affected to take out a loan with good conditions in order to replace loans and reminders with high fees.

Cheap instant loans in comparison are always characterized by their pleasant and fair terms, provided you choose one of the cheapest providers. A loan comparison gives you fast, reliable results, how much a loan costs you each month, and what the total costs are. So make sure that you start the loan comparison with authentic values. It is also advisable to play a little with the term of the loan in order to reduce or increase the monthly installments.

Finally, a loan should be paid as quickly as possible, but the installments (consisting of part of the repayment of the interest) must be within your own financial framework. In any case, avoid running into financial difficulties due to short terms and high rates.

Take Out Loan in Training – Bring a guarantor

Best chances with guarantors

Best chances with guarantors

  • Start your credit request now (this does not result in a contract).
  • After checking your request, the money will be in your account after 4 days.
  • All you have to do is accept our offer. If not, then not. No catch, no upfront costs.

Many young people want to fulfill bigger consumer desires already during their training. This can include a car as well as the first home furnishings. Those who have not saved enough money or can borrow money from their parents often ask themselves whether it is possible to take out a loan during their training.

Even if this question can be answered with a fundamental yes, a trainee or student has to be prepared that it may take a little longer to find a suitable lender or that the bank has narrow limits regarding the amount of the loan or the term puts. In many cases, only a small loan of a few hundred or a few thousand USD can be considered. In addition, the term of the loan must not extend beyond the end of the training.

Small loan

Small loan

A small loan is an installment loan in which the amount of the loan taken out is very low. Due to the high processing costs and the associated costs, not every bank or savings bank offers a small loan. If you want to take out a loan during your training, you should make a comparison on the Internet, pay attention to the loan conditions and the interest rates of the banks and in this connection ask yourself whether you can add further collateral.

A guarantee from a parent or other family member would be one such option. Those who own larger valuables are welcome to use them as security. However, he must prepare himself for the valuables to be deposited with the bank during the credit period. Personal access is only guaranteed once the loan has been repaid in full.

Line of credit

Line of credit

If the house bank determines that the training remuneration is regularly received in the checking account, it may be willing to set up a credit line. The most important requirement is that there are no negative Credit Bureau entries. With a trainee, this should rarely be the case.

An installment loan must be repaid within a fixed time frame. This does not apply to overdraft facilities. Both the disposition of money and the repayment are very flexible. Anyone wishing to take out such a loan in training only has to pay interest on amounts of money that they have drawn. No interest is charged for the provision of the overdraft facility.

Discover new sms loans

Never before have the opportunities been as great as today. Borrowing money cannot be easier than it is now. For you as a customer, just send a text message and your loan request will be processed. These new sms loans allow those who need it to borrow money quickly. Unlike before, there is today a wide variety of different types of fast loans. Telephone loans are, at all, a relatively new but rapidly growing industry with many potential customers. As a customer, it is only for you to find the sms loan you find most advantageous and send your sms away! For those who would rather apply for their loan via computer, it is now also possible to apply for sms loans via the internet. You will often receive your request processed and the money in the account the same day. Perhaps this is the micro-loan’s highest-priced quality,

 

SMS without security

mobile loans

Most sms loans, which are a form of micro-loans, are given without UC and as with private loans, without collateral. The amount of the loan varies, with usually between USD 1,000 – 5,000. Since it is usually expected to pay back after 30 days, the annual interest rate for such loans is high. This is because this interest rate is calculated on exactly what it sounds like, one year. In addition, you usually pay a fixed fee for the loan precisely because the loan period is so short, which means that you can just as well repay your loan the next day as on the last date. Apart from the fact that the fee for the loan is fixed on sms loans and variable on many other loans, these micro loans do not differ very much from other loan forms. However, always make sure to examine the advantages and disadvantages of the various forms.

 

Before you borrow

Before you borrow

As the benefits of sms loans are so many, it is appropriate to mention that these loans are only temporary solutions. Remember that you are personally responsible for repayment. We therefore recommend that you always review your finances carefully before taking any type of loan, also read carefully the terms of the loan you choose to take so that you do not overlook any possible extra costs. In case a customer does not repay his loan on time, this will get a reminder of the payment. If payment of this also fails, you risk getting a claim from debt collection.