Mini loans: what they are and how to apply for them

Mini loans are designed to cover small financial needs that come up from time to time.

Mini loans are very useful for anyone with insufficient funds needing to make a one-off payment for an unexpected expense. Typically, when we think of bank loans, large sums of money and strict requirements and qualifying conditions come to mind. Buying a car, remodelling your home...

However, mini loans cover smaller cash needs (usually between €100 and €1,000). What's more, these loans tend to be processed quickly and don't involve any major requirements for the customer. Set against these access benefits are the interest charges for this type of product and their repayment conditions. Let's go over their characteristics in detail.

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How to take out a mini loan

These mini-loans are usually granted by credit institutions associated with banks, not directly by banks themselves. Therefore, the most common way to take out such a loan is over the internet. By completing a simple form, we are usually required to provide our personal details such as name, surnames and ID, account number, and so on.

Moreover, to prove that we can repay the loan, they typically require both a bank statement that proves the status of our accounts and documentation to support our income; this can be from a salary to the bill of a pension.

There are products, as the Fast Loan of BBVA, that not require documentation. This type of loan is reasoned for anyone who need between 3,000€ and 20,000€.

Another way to quickly obtain a small loan is to apply for a BBVA credit card, which will let you defer payment for your purchases in the form of several monthly payments (with interest added). You can even transfer cash from your card to your account, up to the limit you have been granted, then make convenient monthly payments to pay back your balance along with the added interest.

Interest charges and the repayment period of a mini loan

As with any loan, the interest associated with a mini loan varies depending on the issuing credit institution. Typically, we will find mini loans from a 1% daily interest rate, although the final price of the loan is usually indicated over a 30 day term, such as: €500 cost after 30 days. This type of loan therefore has higher interest charges than those that are usually associated with short-term loans for larger sums.

Moreover, unlike regular loans, mini loans have to be repaid in full after 30 days, since in the event of any delay, late-payment interest charges will come into force. Therefore, it is not possible to split up the payment.

Due to the associated interest and short maturity term, this type of financing is only recommended for customers with unexpected expenses or emergencies who are sure that they can repay the loan with interest within one month. That said, since they have a fixed interest rate and a short repayment period, the customer always knows what the exact cost of their loan will be.

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Requirements of a mini loan

One key advantage of this type of financing is that there are hardly any qualifying conditions. Unlike regular loans for larger sums of money, these small loans do not require the customer to provide an endorsement; However, although applicants are not required to submit any paychecks, they must be able to demonstrate a source on income.

As the requirements for taking out a mini loan are minimal, they are usually granted on the same day as the application and, in some cases, even within a few minutes.

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