Everyone knows, in theory, what a loan is based on. It is a specific economic concession issued by an entity and backed by a guarantee that must be subsequently returned with interest. So far everything is right. However, would you know how to differentiate it from a mini-loan?
Although a priori they seem essentially the same, mini credits have specific characteristics that differentiate them from other types of credits. The name itself gives us a clue, and obviously the amounts granted in this type of credit are lower than those granted in a loan for use. If you want to learn more about it, read on.
Origin of mini credits
This type of financial product to which we refer, the mini credit, exists and has always existed in different variants. However, it was from the economic crisis of 2008, and especially from 2013, when this product experienced its boom. Given the weakness of the bank that restricted loans, companies specialized in these types of loans emerged that covered a need that had become vacant.
Consequently, many people obtained financing for their purposes. One of the fundamental characteristics of mini credits is that they do not usually exceed 1,000 dollars and are usually returned in short periods of time, such as 1 or 2 months. That is why they are used for specific occasions, such as emergency payments, periods prior to payroll collection when “it is not reached at the end of the month” or to start small businesses.
Some benefits of mini credits
One of the main advantages of the mini credit over the conventional loan, without entering into the subject of the amounts and terms that we have already mentioned previously, are the requirements for your application. While a large number of documents and information are required in the conventional loan, the mini credit is much less restrictive. Only one account is required where to make the transfer, be of legal age and, obviously, documentation proving your identity to avoid possible impersonations. It is practically never necessary to present guarantees or payroll and it does not matter if you are included in delinquent files.
It is necessary to point out that, although mini credits are very useful and recommended by prestigious institutions, prudence is also necessary. As the OCU warns, before making a rash decision you must compare and shuffle among the best options. You should also be aware of your ability to pay and you should never chain credits, even if they are small amounts, to avoid insolvency.
On the other hand, mini credits, when granted by professional companies and not by banking entities, can be applied online without having to go in person to any specific place. This facilitates the processing, since through the websites of these companies it is easier to carry out the procedure, it is much more intuitive. This in turn has a positive impact on the flexibility and speed of the concession, much more efficient than if you were a banking entity.