What is a payday loan?
Again and again you hear the description “payday loan”. It is basically a very similar product as the microcredit. However, the amounts here are often much smaller and can also be less than 500 euros.
The difference with respect to other loans is that a payday loan can be disbursed immediately – at least in many cases – because the small amount of bureaucracy costs much less. So it is often possible that only a few hours pass from the application to the payment to the account. For quick payouts you usually pay with a slightly higher annual rate than other types of credit.
In addition, a payday loan can often be paid out if your own credit rating is not perfect , as the risk to the lender is lower. Thus, this form of credit is perfect to bridge small financial bottlenecks or to balance the account until the next salary payment to avoid the cost of a credit line.
What are the benefits of a payday loan?
Fast to apply, little paperwork
The providers of mini or micro loans offer their products in Germany almost exclusively via the internet. As a result, and simplified by the providers procurement guidelines, the application often takes no more than 10 minutes, can be done without bureaucracy and also the payment of the loan amount goes quickly.
Less difficult to get than larger loans
Due to the low credit sums, the risk of a default on the credit providers is limited. That’s why you have much better chances of getting one of these micro-loans than a classic, higher credit from a bank.
Mostly cheaper than a credit line
Mini-loans can also be an excellent instant loan to balance the account at the end of a month, to prevent falling into the minus and having to pay the often higher interest rates for the credit line.
Additional services of payday loans
For micro-credit providers, there are several special and additional benefits that other credit providers do not offer in this form.
24 hours option
All of our providers offer a 24-hour option, which means that the processing of the application is carried out very quickly and the money is in the account after 24 hours at the latest, which puts you quite close to an immediate payment.
Express and flash transfer / payday loan immediate payment
Some vendors, such as Vexcash, even offer an even faster version. Usually the condition is that the application is received by 16:30, then there is the payday loan immediately on the account or the same day.
Some providers, such as Ferratum Money, offer different rate models. Here, for example, the 2-rate model, in which one does not have to pay the entire amount directly back, but – again name suggests – in two installments.
Requirements for a payday loan
Although micro-loans are easier to obtain, as is the case with larger savings banks, there are of course some basic requirements that must be met in order to get the money and some exclusion criteria.
These criteria must be met:
Residence in Germany
Sufficient creditworthiness (variable, differs between providers)
These are the exclusion criteria:
Very bad score (provider dependent)
Ongoing personal bankruptcy proceedings
On-going application or submission of an affidavit
Pending arrest warrant
Pending garnishment by a judicial attachment order
When do I have to pay back a payday loan?
For most providers, the conditions are similar and the basic term is usually 30 days . In some cases, there is still the option to add extensions, but this will bring additional costs that make the terms of the loan less attractive.
Accordingly, the repayment term is not as big a factor as other loans. You should be sure from the start that you can repay the loan in the period of the repayment term otherwise, as I said, additional costs.