Today financial organizations offer to get microloans with only a passport, which began increasingly receive response from public. Advertisements about borrowing small amounts of money can be found in the street, in public transport, and flyers with the same content are handed out on the street and put on mailboxes. Internet is also invaded with such advertisements. People more and more are offered money on credit, but are such financial decisions necessary?
Who Take Microloans?
Microloans are granted in following cases:
- when borrower does not have access to traditional banking services;
- when conventional loan is unprofitable to take (the required amount is small, but banks offer a long-term loan that requires mortgage bonds);
- when there is no time to issue conventional loan, but it is very urgent to take a microloan.
In case of microloans long-term commitments are not required, and it suits consumers.
What Organizations Offer Microloans?
Companies that offer this service are relatively new members of financial market – microfinance facilities, which have nothing to do with credit institutions, which is why they carry out their activities without obtaining bank license.
But at the same time only legal entity can become microfinance facility, and prerequisite for obtaining this status is to be put on special state register. And Federal Financial Markets Service is obliged to carry out actual state regulation and control over microfinance organizations activity.
About Microloans in Details
Different lenders may offer different loan programs, but in most cases these are still small loans. For example, Speedy Payday Loan service https://speedy-payday-loans.com/ offer various kinds of loans (small and large) online at favourable terms.
- quick decision – decision on average microloan is taken not more than in half an hour at first call, and in future – even faster, as filled borrower’s profile is already in database;
- minimum documents needed – be sure to provide passport and a second document, if required, selected from extensive list, approved by lender;
- no need in security – in most cases microloans are granted without any security at all and coverage is required only when a potential borrower wish to receive quite a large sum;
- non-purposed character – creditors, providing microloans, don’t control spendings;
- convenient repayment scheme – apart from traditional annuity, such loan may be repaid even with only one payment.
- lender’s «indifference» to borrower’s income;
- no need to provide warrantor;
- loyalty to credit history (here banks are still an exception from general rule).
Microloans have only one disadvantage – their cost. These loans are the most expensive, but, due to short terms, overpayment does not hit borrower’s pocket much. Therefore microloans are often preferred by some categories of private entrepreneurs – often those whose capital turnover period is very short.
Microbanking Specific Features, Difference from MFO
It should be noted that more and more banks, which grant microloans, began to appear. Although for them this kind of earnings is «quite risky», due to good development perspectives for this sector, banks are forced to go for it. Interest rates at microbanking is lower than at MFOs, but the time it takes to issue loan is much more, as for banks are not fully specialized in this kind of business. Moreover, banks, besides passport, may require some other documents. MFOs specialize only in microloans, due to which registration process is almost automated.
It is worth mentioning that targeted audience of MFO services consumers is much wider than number of people applying to bank, as microloans services are widely popular at people with bad credit history, those working informally and also those who have no time or desire to take regular bank loan.
In disfavour of banks speaks the fact that MFOs penetrate deeper into regions. It is not easy to find any bank branch in small district center, but MFO is likely to be found there.
Microloan Granting Procedure
First of all, on the basis of written above, you need to decide: to apply to specialized microfinance institution or to bank. In any case, you will have to fill a form, containing the following information: full name, date of birth / age, home address, place of work, contact phone numbers, average monthly income, etc.
Secondary applying to the same organization won’t require filling any forms. The only document required in most cases is passport, sometimes you can be requested to provide second identity document (e. g. driving license). Usually it takes 5-10 minutes, maximum half an hour, to make a decision after filling the form, and cash is given out immediately after procedure.
It should be clarified that MFO is still have some requirements to borrower – an age limit (in different organizations, they can be different), and place of permanent residence. Some grant microloans to retirees, others do not. Some MFOs send manager to its customers to issue microloan at home.
There is another method to obtain microloan without leaving home. Today the main source of microloans in the Internet is credit services, operating in automatic mode, where a loan can be obtained within few minutes. One of the most widely popular is Speedy Payday Loan service, which loan granting procedure is the most easy, quick and convenient.
- Be extremely attentive! Don’t think that if money is given quickly, you can not get acquainted with credit contract. It in any case should be examined carefully. After reading, you at least will have a clear idea about repayment period, overpayment amount, possible penalties, and at best – you’ll avoid unpleasant surprises.
- Realistically assess your possibility of repayment! Better not take microloan than to fall into non-payers category.