The consumer association advises that the interest on these short-term urgent loans can exceed 4,000% APR and that the solvency of the client is not checked correctly and that he is not informed of all the conditions.
Christmas is the period of the year when most users usually request quick mini loans. It is the time when there are more purchases and expenses, gifts, parties and family and business meals make the pockets suffer. Many people opt for this type of short-term financing to cope with all this high consumption.
However, the use of these credit products entails a series of risks and dangers that can lead to problems for users. This is what the Association of Consumers and Users of Banks, Savings Banks, Financial Products and Insurance (ADICAE) warns in a recent report in which it highlights some practices considered abusive.
The association warns of the high interest charged for mini-credits that, sometimes, can exceed 4,000% APR and that many times it is not noticed, only the amount to return and the nominal daily or monthly interest is indicated, which makes it appear that they are cheaper than they really are.
Adicae also reports the lack of information about the consequences of not being able to return the money, of all the conditions that the loan includes, of the ways of claiming in case of disagreement or of the right of withdrawal.
Fast loans have become a way to get urgent money more and more used. Its speed, which on many occasions allows obtaining the requested quantity in less than 24 hours, and it’s few requirements, make them very accessible and easy to request. The consumer association also warns about the point that the client’s ability to pay back the money is not correctly proven, causing many to be unable to cope and enter into a spiral of over-indebtedness.
Tips before resorting to quick credits
From the specialized website offer a series of recommendations to avoid the use of these products and, in the case of having no other option, minimize the negative impact they may have: Exhaust the alternatives to obtain money. There are many other ways to have a small amount without having to resort to mini loans.
You can choose to ask for money from family or friends, request an advance from the payroll in the company, ask for a personal loan in a bank, which will always offer a lower interest. Other alternatives can be loans between individuals or even credit cards, which also have a lower cost.
Make sure you can return the money on time. If there is no possible alternative and it is necessary to resort to a mini-credit, it should only be done if you are totally sure that the day that the term ends will have the necessary money to return it. If you have doubts, you should not ask for them. Compare between entities.
There are many lenders that offer this type of product, but not all offer the same guarantees and conditions. It is convenient to inform yourself and compare so as not to take surprises and make sure that the entity is trustworthy and complies with the regulations. Do not ask for more than what is needed.
Once the previous steps have been reviewed, if you decide to take out a quick loan, this should only be for the amount you need, never request more money than is required, since the high associated costs will make it expensive unnecessarily.
The consequences of not being able to return the money from payday loans on time can be quite serious, incurring high-interest rates that can lead us into a spiral of increasing debt- need help with payday loans. We can also end up enrolled in a register of defaulters such as Asnef, making it impossible for us to request money from other entities and even not being able to contract certain services such as insurance or telephony.