Monthly Archives: May 2020

Uncategorized

Mini loan or overdraft facility?

Interest rates are low, and short-term expenses are higher than expected because the washing machine has given up its ghost or Christmas and the gift purchase is just around the corner. How quickly did you overdraw your account? If the bank has set up an overdraft facility, that’s no problem at first.

Finally, the loan is available relatively quickly and just as easily. Just go to the nearest ATM, enter the desired amount and the credit is available! And the whole thing completely detached from any opening times of the bank. Another advantage: no lengthy discussions with the bank advisor, no submission of any documents or a long explanation of why you need a loan right now. The overdraft facility sounds like the non-plus-ultra – right?

But what if the bank changes its mind and quits? Or is it simply realized that the overdraft facility is too expensive? What would be an alternative to the current overdraft facility? Wouldn’t a mini loan for unexpected or temporarily higher expenses than usual be better? Questions we want to get to the bottom of.

Why a mini loan is better than an overdraft facility

Why a mini loan is better than an overdraft facility

The advantages of a mini loan start with interest. With a mini loan, you benefit from a permanently fixed interest rate. Where, however, the overdraft facility can become expensive due to its generally high interest rate and the risk of a short-term adjustment of the interest rate to the market.

The timed repayment of the mini loan also ensures that you can really get out of the temporary lack of liquidity and not nestle in it. The bank can also simply shorten or terminate a overdraft facility in the event of permanent non-repayment or lower cash receipts. A situation that then leads to the next problem: either pay everything at once or reschedule.

This risk can be avoided from the outset with a mini loan and its specified credit terms. Approving a mini loan is quick and easy. Why the loan applied for usually arrives in your own account within two to three working days. Without using any additional options that are subject to a fee.

Especially in times when interest rates are very customer-friendly, mini-loans also offer the advantage that interest rates remain the same throughout the term. The overdraft rate, on the other hand, fluctuates and is also sometimes significantly higher than the average interest rate for a mini loan, which also affects the amount to be repaid.

What to look out for with mini credit

What to look out for with mini credit

Because of their profitability, mini-loans are often given primarily by direct banks and financial institutions specializing in this type of loan, less often by traditional branch banks. Therefore, when applying for a mini loan, you should pay attention not only to the interest rate, but also to the rate amount and the term length.

In addition, providers should be preferred who have a corresponding banking license and are therefore allowed to carry out the credit business in Germany. If the money is needed particularly urgently, you should check whether an instant payment, a so-called lightning loan, is offered.

But also here applies: Check the loan offer for hidden costs and think carefully whether you can not wait a day longer for the borrowed money. Some providers of mini loans still secure themselves through Credit Bureau, despite their speed and unbureaucratic allocation. This can also play a role in the approval. Basically, it should be borne in mind that the lower the loan, the faster the processing time. The terms are also significantly shorter.

When the mini loan is worth it

When the mini loan is worth it

Above all, it is of course always better to be able to access reserves in order to avoid debts in general. If you have no reserves and need a little financial injection, you can get a mini loan quickly and easily. Taking out a mini loan is particularly worthwhile if short-term liquidity problems are to be solved easily and without long-term commitment.

Uncategorized

The budget as the basis for the loan admission.

Why a budget ? Prudent management and the avoidance of things that are not available in the household budget are the basis for a healthy financial situation. This responsible behavior is worth striving for and can be learned. The most important tools for the correct handling of income and expenditure are a budget and a budget book. Only those who know exactly how much money they can expect each month and what costs they will have to cover can really keep their financial situation under control. Further illustration at http://www.phillyfriend.com/payday-loan-consolidation-company/

This also applies when it comes to making a necessary purchase or investment using a loan. In such cases, the main thing is to have a firm understanding of how much credit you can afford. The creation of a budget and the keeping of a budget book are also the foundation for a loan-financed project.

The basic elements of the budget

The basic elements of the budget

On the revenue side, a budget contains all incoming payments that can be expected in the month. This includes salaries, wages, maintenance payments, child benefits, pensions and other items. On the other hand, all expenses are recorded as they occur during the month. Rent, groceries, cars and reserves make up the bulk of this expenditure. Many small amounts for the various necessary purchases and purchases must also be considered when planning.

Experience has shown that many small amounts quickly add up to an unexpected amount. The budget therefore lists all items, even very low items, in terms of both income and expenditure. Finally, all sums are added up. The difference between the income and the expenditure shows whether the money is sufficient for the monthly needs at all, or whether in the best case scenario there is even something left at the end of the month.

The budget helps to take out a loan

The budget helps to take out a loan

But even if, despite all the good business practices, the situation arises that a purchase must be made on the basis of an installment loan, the household book is a real help. Because a precise analysis of your own financial situation is the be-all and end-all of every credit check and thus essential for a bank’s credit decision. The conscientious and therefore honest keeping of a household book provides the necessary basis in the event that a loan is required.

This monthly overview provides a realistic assessment of the financial scope for repaying a possible loan. Basically, the following applies: The loan terms (amount of the loan, term, interest, monthly installment) depend on your own monthly financial capacity.