What is a microcredit? Why are they dangerous? Who issues them?

Microcredit – what is it, what are its advantages and disadvantages?

People are constantly in need of money, especially when unforeseen situations arise. But often, due to various circumstances, banks cannot grant a loan, so you should turn to specialized organizations for small loans. Also, we can see similar advertisements on the street that offer a lot of money at low interest rates. What is a microcredit? Should I take? How to quickly get such a loan? What are the pros and cons of this service?

What is a microcredit?

Microcredits are small loans from organizations offered at high interest rates. To get a loan, practically no documents are needed – no certificate from the place of work, solvency, just passport data.

It can only be issued for a strictly short period – from a week to a month (in rare cases – a year). At the same time, the rate can reach 750% per year, several percent per day.

TOP-5 MFIs of 2019

Company

Conditions

1 loan

repeated loan

Term

To receive

1 loan 2,000 – 10,000 rubles

repeated loan 2,000 – 30,000 rubles

Term: 7 - 30 days

credit in lime

1 loan 100 – 20,000 rubles

repeated loan 1000 – 70,000 rubles

Term: 15 - 168 days

credit in ekapusta

1 loan 100 – 10,000 rubles

repeated loan 100 – 30,000 rubles

Term: 7 - 21 days

loan in joymoney

1 loan 5,000 – 8,000 rubles

repeated loan 5,000 – 30,000 rubles

Term: 5 - 30 days

Moneza

1 loan 3,000 – 15,000 friction

repeated loan 2,000 – 30,000 rubles

Term: 5 - 30 days

Company

Conditions

1 loan

repeated loan

Term

To receive

money loan

1 loan 300 – 12,000 hryvnia

repeated loan 300 – 15,000 hryvnia

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Term: 7 - 30 days

money loan

1 loan 50 – 15,000 hryvnia

repeated loan 50 – 15,000 hryvnia

Term: 1 - 30 days

cashinsky loan

1 loan 400 – 5000 hryvnia

repeated loan 800 – 5000 hryvnia

Term: 7 - 30 days

take a loan on loan alex

1 loan 400 – 10,000 hryvnia

repeated loan 100 – 10,000 hryvnia

Term: 5 - 30 days

credit on my credit

1 loan 100 – 3000 hryvnia

repeated loan 100 – 10,000 hryvnia

Term: 1 - 30 days

Microfinance organizations – what are they?

These companies or MFIs are committed to granting loans to anyone who wants to. The activities of the companies are regulated by legislation and the companies themselves are in a special register. The laws that define and restrict the work of MFIs are still not strong enough, although this business is developing very quickly. That is why it is very important to study in detail the agreement that is signed when receiving a loan.

Of course, the debtors themselves are aware of the insecurity of the potential debtor, therefore, the documentation is prepared with caution, although not always verified. And, if you don't repay the loan, quite severe penalties will be imposed – the debt amount can double or triple, and the interest will quickly grow. Also, if you continue to ignore creditors, they may legally transfer data to specialized organizations.

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In which cases is a microcredit issued?

Those who want to obtain such a loan often turn to microfinance organizations in such cases:

  • When it is not possible to obtain a traditional bank loan due to lack of work, bad credit history or insufficient collateral.
  • When there is no point in taking out a regular loan. This happens when you need a small amount for a short period, while banks only issue long-term loans.
  • When there is no time to get a loan (you need to collect documents, go to a bank) and getting a loan from a specialized organization is much faster.
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You can get a microloan in literally 10 minutes without submitting a documentation package. But you need to know the details of debt repayment, because often, out of a desire to get the amount faster, we don't even delve into what the microfinance organization requires of us.

Microcredit: advantages and disadvantages

  1. The peculiarities of obtaining a microcredit in each enterprise are different, as each owner has their needs. This is mainly due to the number of payments or the interest rate. But the main point is that getting a loan has its advantages for any category of citizens:
  2. You can repay the loan at any time. Banks and most financial institutions have very clear loan repayment terms, and if you want to repay them sooner, they may require additional payments. In companies, microcredits are only encouraged if you return the amount sooner – next time, you can take more funds.
  3. The organization does not check the documentation, credit history and other requirements of ordinary banks.
    Anyone can accept microcredit, regardless of the presence of an employment relationship, age (the main thing is to be 18 years old) or other factors.
  4. It is possible to extend the terms of the loan. As with bank loans, if the borrower is unable to return the funds, it is best to notify the lenders. Ignoring it will lead to much more serious consequences, but if you contact an MFI, they may arrange a restructuring or otherwise extend the terms.
  5. Loan processing is carried out very quickly. In most companies, the “order confirmation” procedure takes a few minutes, while banks very carefully check their solvency.
  6. Online loan processing. Many organizations offer the opportunity to obtain microloans on websites. Then you will need to enter all the data manually, send copies of the documents and wait for the managers to respond. The procedure may take longer, but you will receive the amount on a bank card, Yandex.Money, WebMoney or another payment system.
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Why are microcredits dangerous? These companies also have drawbacks that significantly affect how you return funds to them:

  • A much larger amount of cash back, taking into account the interest rate, “bonus” due to delays and an unexpected increase in the rate is possible at any time.
  • If only one payment is overdue, the microfinance company can transfer your case to collectors.
  • There is a risk of being defrauded, so you should always consult the company's documentation or find it in the official register of the Ministry of Finance.

See also: Online credit for a card: how to get without certificates and with a bad credit history

How to cheat microloans?

There is no way to legally avoid debt repayment. It should be remembered that in the contract you indicated your passport data, therefore, creditors have every reason to demand the return of the money in accordance with the signed documents.

But at the same time, Ukrainian laws still insufficiently and precisely regulate the activities of these companies, and the courts realize that the interest rate is too high. There is also an onerous business in the jurisprudence. This means that the company or the owner of the funds lent them to someone else at unfavorable interest, realizing that the borrower is in a difficult financial situation.

You can challenge all decisions and contracts in court, but keep in mind that doing so can use a lot more funds than just paying off the debt.

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