What is an SMS loan / Micro loan?
In recent years there has been a lot of talk about micro loans or SMS loans that they are often called. The type of loan is still fairly new when compared to the more classic forms. This form of small loan came to Sweden about 10 years ago and has been popular ever since. In this article, we will try to find out what applies to these loans.
Micro Loan = A Loan
In fact, it is true that a micro-loan is a non-bank loan in the same way that a private loan is. For a bank loan, a loan is unsecured, which these two forms are both. However, private loans and micro loans differ because there are some pretty big differences. The two main things are that private loans are usually much larger and also extend over a considerably longer period. But if you look closely at the loan types, they are actually two-loan loans.
Difference SMS loans and micro loans
In the media, the word SMS loan is often used for all smaller loans and this is something that has gained hold. The name comes quite clearly from the fact that from the beginning, the loan was taken with the help of their mobile when an SMS was sent to lenders. Although loans are still possible in this way, it is not particularly common anymore why it is a little strange to call that smaller loans for SMS loans.
Hence, we use the word micro-loans to describe these loans mainly. We use the word SMS loan to talk about loans where it is precisely the cell phone that you use to borrow the money. Otherwise, there is no difference in the loans as they cost the same amount, etc., the difference is just how the application process itself goes.
This sounds more serious than it really is. It has absolutely nothing to do with it not being safe for you to borrow money if there is no security. Instead, it is only a matter of whether you need to make a mortgage for the loan or not. Mortgages that can be found in two different forms: mortgage and mortgage mortgage. A hand pledge is, for example, if you go into a mortgage bank and hand in a jewelry or similar and get money for it. If you do not redeem it then it accrues to the mortgage bank. Mortgage pledge is when you still have the pledge in possession. The best known example here is mortgages where the home is a mortgage for the loan.
Generally, one can say that a loan without collateral means greater freedom for the borrower but at the same time is more expensive. The fact that it becomes more expensive has to do with the fact that the lender cannot be as sure of getting back his borrowed money. If there is a mortgage in the form of a house then this can be forcibly sold and the money goes to repay the loan. Sad for anyone who has borrowed money but more secure for the lender. To secure their income, lenders therefore charge higher prices.
You get the freedom when the money does not have to go to buy something special. If you take out a mortgage, it must be possible to pay a house, but here you can choose freely where the money will be used for. If you only manage the credit check, the lender has nothing more to say about what the money is used for. Then of course there are things that it is not recommended to use them with, that is another thing.
Micro loan size
From the beginning, it was only possible to borrow a few thousand kronor at every opportunity. However, this has changed in recent years and there are lenders who now lend up to USD 15,000 in what can almost be called micro-loans. Where the limit is to be drawn between micro-loans and ordinary private loans is starting to become difficult to draw, when previously it was only possible to borrow up to USD 3,000, it was not difficult to draw this limit. But now when it comes to loans of USD 15,000 and many lenders who definitely offer private loans have a lower limit of USD 10,000, it gets a bit tricky.
The lowest loan amount available is USD 500 and then it extends all the way up to the USD 15,000. Then it is far from all lenders that lend this much. It is still common to have a maximum limit of USD 3,000 or USD 5,000.