What-is-a-Microloan

Microloans – advantages and disadvantages

The essence of microloans

Loans with a limited amount and minimal origination process are microloans. They are taken by anyone who wants to, applying for a loan in 10 minutes, right from the couch. Microfinance organizations lend small amounts for short periods, often less than a month. They have been proving their necessity and importance to consumers for years.

Customers choose a repayment term based on when they will have the opportunity to repay.

These are payday loans that allow citizens to make up the gap in their budget before the next payday. The number of microloan consumers is growing every year.

The microloan system is based on the fact that the client gives more than he or she borrows. The technical part of money disbursement is debugged and simplified so much that the microloan operation is no more complicated than a money transfer from one bank card to another.

The web resources and mobile applications of large MFIs are so simplified that even the elderly can cope with the registration.

Short-term lenders assess borrowers faster than banks. In theory, MFIs do not lend to everyone.

Advantages of Microloans

All depending on the specific program, the positive and negative aspects of microloans are common in each case. The advantages of this financial instrument are:

high speed of decision-making – banks reduce the time of consideration of applications, but the waiting time for an answer remains long. People do not like to wait long, so MFI products remain in demand, programs check the potential borrower within 5-10 minutes of receiving the application;
Instant money receipt – consideration of the application may be prolonged if additional documents are required, but crediting the money after approval is carried out without delay. The amount will instantly appear on your electronic account or bank card. In rare cases, crediting the money may take up to 3 days;
Application form anywhere – the Internet simplifies life, it is more convenient and faster to submit an online application, filling out the form will take no more than 5 minutes. You only need access to the Internet, you can apply from your PC, tablet, or smartphone;
Transparency of terms and conditions: MFI stipulates the cost of the loan right away. The client enters the amount of money he wants to borrow, indicates the period of use, and immediately sees the amount of overpayment. Then he decides accepting or refusing the loan;
A client with a ruined credit history may receive a loan: in a time of crisis, banks select borrowers more strictly and lend only to loyal customers. Many people are denied money. MFIs willingly give money to customers with a damaged credit history, laying the risk of default in the interest on the loan.

How is microcredit useful?

Using microloans, MFI clients can:

gain the status of a reliable borrower by correcting a bad credit history – receiving and repaying several loans increases the chances of getting a large amount from a bank, as the borrower’s reputation will be corrected;
Receive money by presenting only your passport – no TIN, income certificate, or other documents are required to obtain a loan;
Don’t bother filling out a voluminous questionnaire; if you borrow money from an MFI, you can fill out a simple form that takes up to 5 minutes. A client provides his contact information, passport details, employment details, and income;
Issue a loan without collateral, guarantee – the money is approved without any unnecessary requirements;
Pay only the interest for the use of microcredit – no additional commission is not provided;
Repay the loan in a single amount at the end of the term or earlier. If interest is charged on the loan, you must repay the amount with interest.
0% up to UAH 20,000

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