Loan acquisitions via the internet: tread with caution!
Mini loans and small loans are two distinct types of short-term loans available in Germany, each with its unique features and requirements.
Mini Loans
Mini loans, also known as quick loans, are small, short-term loans typically ranging from a few hundred euros. These loans are designed for immediate, small financial needs and are often repaid within a few weeks to two months. Mini loans are known for their high fees or interest rates, often around 15%, reflecting their payday-loan-like structure and no credit check requirements.
Some providers advertise that mini loans can be paid out as quick loans just a few minutes after the application is submitted. The application process for mini loans is often simplified and may not require proof of income. However, it's important to note that mini loans come with significant costs and should be used responsibly.
Small Loans
Small loans, on the other hand, cover a broader range of financing options. They can range from a few thousand euros up to 50,000 euros (such as SBA microloans), with averages around 13,000 euros for some programs. The repayment terms for small loans vary, ranging from several months up to a few years.
Interest rates for small loans depend on credit profile and purpose. Short-term personal loans with good credit may have rates as low as 6.5%, but rates increase with risk and for shorter terms. For instance, SBA microloans offer more favorable rates than mini loans but require some creditworthiness and business documentation.
To take out a small loan online, one must be creditworthy, at least 18 years old, have a fixed residence in Germany, have a German bank account, have a regular income, earn enough to make the installment payments, not be over-indebted, and pass the creditworthiness check. Proof of income, proof of permanent employment, and other documents may be required for a small loan.
Summary
In summary, mini loans are a subset of small loans but are specifically very short-term, small dollar, and high-cost options, while small loans cover a broader, less expensive, and longer-term range of financing. Creditworthiness is a prerequisite for a small loan, even for self-employed individuals, freelancers, students, retirees, and unemployed persons.
Mini loans are often granted by specialized providers such as cashper, Ferratum, or Vexcash, while lenders for microloans are usually the federal and state promotional banks such as KfW or Investitionsbank Schleswig-Holstein.
It's crucial to consider the terms and costs of any loan before applying, and to ensure that you can comfortably afford the repayments. Always remember that responsible borrowing is essential for financial health.
