If you have come this far it is because you have a small project in hand or an unexpected expense, if so, we tell you what micro loans are and what advantages and disadvantages it could be to request one of these financial products. Take paper and pen, let’s start!
What are microloans?
Micro loans are financial products through which you can have a not very high amount of money in a short time. What characterizes micro loans?
Amount to request: what is granted in this type of loan is small amounts, which usually have a maximum of 750 dollars. These financial products are not intended to help you undertake a project or reform your home, but to be an option if you need a small amount of money quickly.
Repayment terms: the borrowed money must be repaid in a short time, normally about 30 days.
Quick micro loans are known in English-speaking countries as a payday loan , what we could define as a “payday loan”. This term defines this financial product well since they are unexpected expenses far from “pay day, pay day”.
Advantages and disadvantages of applying for a micro loan
Like any financial product, applying for a micro loan has a series of advantages compared to other possibilities, just like the disadvantages.
Advantages of applying for a micro loan: these are financial products whose process is usually quick and easy so that the applicant can obtain the required amount in the shortest possible time. In addition, there are usually many facilities such as the possibility of managing everything online, so getting a micro loan online will be easy for those who need it.
Disadvantages of applying for a micro loan: the biggest disadvantage is the price, they are usually very expensive financial products for those who request it since the commissions on this type of financial products are usually very high, multiplying the interest rates of personal loans. On the other hand, contracting micro loans negatively affects your future ability to obtain financing with other financial entities (eg when financing a car), since it is a product that is associated with higher risk customer profiles.