An on-line loan, completed online and paid out within 24 hours, is more expensive than an installment loan taken with some lead time. Nevertheless, this form of credit makes economic sense if dunning costs can be avoided and further consequences can be averted. The time gained should be used to organize a sound rescheduling.
Lenders suspect high default risk
Anyone looking for an instant, lightning or express loan online has probably already exhausted all other financing options. Savings have been cleared, the credit card limit has been used and the current account has been overdrawn up to the amount of the disposition credit granted. Such a scenario causes the alarm bells of any potential lender. Obviously, there seems to be a mismatch between revenue and expenditure, for whatever reason. This increases the risk of a default – the borrower may not be able to service all his debts from his income. Such risks are reflected in the interest rate, as this is not only a fee for the lending, but also for the default risk.
The internet helps with the comparison
To keep the cost of credit down, however, the terms of a loan should be researched online and preferably across multiple platforms. Although credit brokers active on the Internet offer access to many banks with a one-off data entry, this does not provide a complete market overview. Take a close look at what the tabular overviews really offer. Without a detailed credit check, no bank will name a specific interest rate. Either you see interest margins or a lower limit for the interest rate, which may be higher depending on creditworthiness. Only in a second stage, you will be asked to submit a binding loan application and to submit further documents. If employment contract, salary statements and Credit bureau information are available, the bank will make a personal offer. The entire procedure is completed online with the online loan within a few hours. Then the payment can be made and the money is in the account at the latest on the next banking day.
Short-term loans only for short maturities
The second important tip for reducing borrowing costs is to keep the term of short-term loans as short as possible. In a month or two, even high interest rates are not that important. Instead, take out a cheap installment loan. Also for this you use the internet comparisons. Calculate the loan amount so that you can replace all current obligations in one go. These include card and debit debts, but also installment purchases and of course the new express loan. With a sufficiently long maturity, you lower the rates until they match your disposable income at the end of the month. It may take a few years, but when the installment loan is paid off, you are debt free and can start again.