Who does not know such situations? Whenever a small financial bottleneck hits the budget, unforeseen expenses are incurred. If, for example, suddenly the repair of the car is more expensive than thought or the washing machine fails at the most unfavorable time its service. In this case, money is needed as quickly and easily as possible. A short-term loan could be the solution to the problem with which at least the time until the next salary payment can be bridged. What is a conventional installment loan is well known to most people. But what is meant by a short-term loan?
What is a short-term loan?
A so-called short-term loan is a loan with a very short term (usually thirty days) and a small loan amount. This particular form of loan is mainly used as bridging finance. If a larger sum of money is needed, a conventional installment loan is the better alternative.
What are the differences between a installment loan and a short-term loan?
While a short-term loan involves relatively small amounts of credit, usually less than 1,000 euros, the loan amounts for conventional installment loans are in the four- to five-digit range. In addition, the term of a installment loan is at least 12 months. By contrast, mini-loans are usually repaid with the next salary payment, ie within one month. Some lenders also grant shorter or slightly longer maturities for mini-loans.
TIP: For ordinary banks, short-term loans are less attractive. They are associated with a lot of administrative work and are therefore not worthwhile financially. For online and direct banks, things look different, as they have sometimes even specialized in mini-loans. Therefore, here are the best chances to get a short-term loan approved.
Is there a possibility of an installment?
Although these are only small amounts of credit, most providers still have the option of repaying the amount in two installments. This financing is referred to as a short-term loan with a 2-rate option. However, in this case, the term is extended accordingly to 60 days.
Who can apply for a short-term loan?
If you want to apply for a monthly loan, you must fulfill a few basic requirements:
- Main residence is in Germany
- Applicant has a German bank account
- The monthly income is at least 500 euros
- no personal reasons such as insolvency, insurance on oath or garnishment
Is there a short loan even without private credit?
Almost all providers grant only a short-term loan, after the values of the private credit regarding the financial situation of the applicant were checked. The higher the credit rating, the faster the short credit will be granted.
TIP: There are banks that do not report credit request and credit to private credit. Thus, the private credit ranking is not affected by the loan request.
What interest rates are required for a short loan?
The currently historically low interest rates in Germany do not really favor the mini-credits. In contrast to the normal installment loan, the short-term loan requires a very high APR. Interest payments of up to 13 percent are possible.
TIP: Make a short term loan comparison to see which provider offers you the best conditions.
How long does it take for the short-term loan to be approved?
Most credit providers issue a so-called direct commitment. However, this is not a definitive loan commitment. The short-term loan is only legally binding if it has been signed by both parties. This may take several days.
TIP: If the money is needed very quickly, some credit intermediaries offer an express service for a corresponding fee, which speeds up the loan process considerably.
Conclusion: Short-term loan a real alternative
With regard to the very expensive disposition or overdrafts, the mini loan is a real alternative. In particular, if the credit line has already been exhausted, the short-term loan can convince as a bridging loan across the board. However, it is advisable to use a comparison calculator before the conclusion of a short-term loan, which is provided by almost all providers free of charge and without obligation. This is the only way to ensure that you receive the cheapest and most individually tailored mini loan offer.