There can be different life situations where there is a small need for credit. With a required loan amount of, for example, 1,000.00 Euro, the inclusion of a so-called “micro-credit” is recommended. The following article deals with the topic of “microloan” and discusses, among other things, which credit institutions offer such loans and which terms are possible in the context of credit application. Which banks offer you the best conditions for a loan up to 1000 euros and what you should pay attention to here.
The term “microloan” in the banking jargon stands for a loan with a small loan amount. There are no general limits on the amount of the loan, so each bank can individually set up to what maximum amount it will issue a loan as a micro-loan. microloans are particularly well suited to cover short-term cash requirements, which is why microloans with short repayment periods of 6 months or more can be accepted. With regard to the purpose of use, there is generally no requirement for a microloan, but most microloans are taken up for consumption purposes or for rescheduling the checking account. A special feature of microloan is the fact that most banks have a simplified application process. Even with online loans, the credit decision is usually made immediately after the application. This is due to the fact that banks have to minimize the “internal costs” that arise when processing a credit inquiry with a microloan. The income for the bank is manageable with a 1,000.00 EUR loan, which is why the lending business pays off only with a small processing cost.
Due to the low interest income, microloans are not offered by every bank. A credit comparison on the Internet is recommended to filter out which banks lend a desired amount from the microloan sector at all. For example, customers can borrow EUR 1,000.00 from the following banks: Norisbank, bankate, Kreditprivat or bankile (source: www.kreditvergleich24.com). The possible maturities for a microloan vary between 12 and 84 months for most banks. As far as the terms are concerned, the interest rates of a microloan also depend on the creditworthiness of the borrower. Currently, a € 1,000.00 loan with a term of 24 months, for example, from 2.48% (bankile) or 2.66% (bankate) offered (as of 11.01.2016).
Of course, when taking out a microloan, there are some things that you should consider as a borrower. First of all, you should make sure that you are granted a special right of repayment by the respective bank. Special repayments are important to influence the repayment term and thus the costs incurred. From the bank’s point of view, special repayments are of course disadvantageous given an already low loan amount, as early repayment always eliminates part of the projected interest income. In addition, one should absolutely make sure that there is no further “cost causer” in a micro-loan in addition to the interest rate. In order to improve the earnings situation, some banks also grant small loan amounts of, for example, 1,000.00 euros in connection with a residual debt insurance. Due to the small amount of credit, however, it is doubtful whether such a hedge is necessary for a micro-loan. Finally, further costs arise, which can be extremely high in relation to the amount borrowed and in some cases even exceed the interest costs incurred.
Conclusion: The term “micro-credit” is understood in the banking jargon a loan with a small loan amount. There is no limit to the maximum amount of a microloan, but most banks grant microloans up to an amount of 5,000.00 EUR. As a rule, the agreed repayment term ranges between 6 and 84 months. Online credit comparison can help you find the cheapest deal for a required microloan.