It is important to remember that the annual APR does not fall below 20%, so it is preferable to evaluate other options before hiring
In the middle of January, many families consider the possibility of requesting a loan to make the payment of the multiple goods acquired at the beginning of the year more bearable. Initial estimates indicate that in the past Christmas we spent between 6.5% and 8% more than in previous Christmas.
Now, to face the beginning of the year, an increasingly used option is to request the so-called fast credit. Only in 2004, the entities of this sector granted in Spain credits worth 11,706 million dollars. This means that about four million Spaniards hired a product of these characteristics, attracted because they allow obtaining the money in a few days without having to give explanations to the financial entity of the use that will be given to the requested capital.
However, the biggest drawback is the high-interest rates that applicants must pay: the annual interest rate does not fall below 20%. For this reason, consumer associations recommend caution when hiring these high-interest loans and advise that families strive to moderate their consumption.
Fast loans are financial loans that are requested
From 500 to 6,000 dollars, with repayment periods of up to 60 months (five years). They do not usually present opening commissions, although their interests are around 20% APR. This type is usually, sometimes, masking the client informing him only of monthly interests. If that monthly interest is multiplied (around 1.8% by twelve), the clearest reality is seen. In addition, for early cancellation of the loan, commissions usually apply around 1% on the amount that remains to be repaid.
On many occasions, those interested in a fast loan do not usually pay the attention they deserve to the interest rate data that will be applied to the requested money, or to the commissions.
Many users get carried away by the possibility of having the money instantly, which is one of the main characteristics of this type of loan. In addition, the freedom to use the money without having to justify its purpose to the financial institution that grants it is another of the features that most promote your request.
The product is contracted practically without paperwork
To be able to subscribe to a loan of this type, the documents that the entities usually request are a photocopy of the DNI, the last payroll, a receipt domiciled in a bank (only occasionally) and the number of the current account in which the loan. The entity undertakes to provide the money within 24 or 48 hours after receiving all the required documentation.
How much does a quick credit cost?
Apart from these “hooks” (widely used in the advertisements of entities), subscribers should not forget to look at the interest rate they will have to pay. It is convenient to make accounts of how much the operation can leave. For example, Good Finance currently offers a loan of 3,000 dollars at an APR interest of 21.92%.
Although at the outset it is a very high interest, the entity tries to make the product acceptable and attractive, allowing it to be amortized within 42 months. Thus, the monthly fee that the customer must pay is 99 dollars. Simple operation allows you to calculate that the customer must pay a total of 4,158 dollars, 1,158 dollars more than what they lend.
In Good Credit they give the possibility of hiring a fast loan of 600 dollars, to be paid in 25 monthly installments of 30 dollars each. The interest rate applied is 25.56% APR. In this case, the client will end up paying 750 dollars, 150 dollars more than requested. Being a smaller amount than those mentioned above, the interest is higher.
From these examples, it can also be deduced that since they are small loans, the entities are interested in offering ample repayment periods since that means charging them higher interest.
However, customers should assess their possibilities and try to find the most suitable combination between the monthly installment to be paid and the total term of the loan. Sometimes, extending the term more than necessary means paying interest for more years and narrowing it in excess can lead to a heavy burden. The important thing is to choose the quota that is most comfortable for the consumer.
What entities grant them?
A decade ago, only three entities operated significantly in this segment. Today there are five major firms that share the cake of fast credits. Good Credit, Good Finance and E-Money are the three financial credit institutions specialized only in fast loans operating in Spain.
Román García-Miguel explains from Good Lender Bank that they entered this area because they considered that it has a long history. From SCH they estimate that the entry of large entities has given solidity and credibility to this business that, despite everything, is still viewed with suspicion from many sectors.