Short term loan
A short-term loan is a form of loan that is very well known in the Anglo-Saxon region as Payday Loan and in Sweden as express loans . In Germany, however , this form of credit is not yet very widespread. Short-term loans usually have a term of 30 days and can be extended to a maximum of four months , depending on the country ( United Kingdom , USA , Canada , Australia ). In Germany, however, the terms of a short-term loan are much wider. Depending on the provider, the term of such a loan can be between five days and a maximum of 62 days. Unlike in the Anglo-Saxon region, it is not possible in Germany to extend a short-term loan beyond the agreed loan period. It is also not possible to replace an existing short-term loan with a new loan. You can only take out a short-term loan again when the old loan has been repaid in full. This is to protect borrowers from over-indebtedness .
Short-term loans have come under heavy criticism from consumer protection, particularly in the UK. In Sweden, the government plans to ban express loans in their current form. Along with this prohibition is the definition of the maximum allowed interest rate for express loans. From 2018, the maximum interest rate for short-term loans in Sweden may be a maximum of 40 percent above the current base rate.
Short-term loans in Germany
In Germany, the business model for short-term loans is still largely new. A synonymous term is mini-loans. The first offer for short-term loans in Germany came in 2012 when the Berlin-based Vexcash AG launched an online loan platform for short-term loans on the German market. With the Ferratum Group and Cashper , two further providers of short-term loans entered the German market in 2014. At the end of 2015, Targobank , the first major German bank, entered this credit area. The loan amounts are limited to almost all providers to a sum of 600 euros and can only be applied for over a maximum loan period of 62 days. These loan conditions apply to customers who take such a loan from one of the providers for the first time. A general feature of a short-term loan offered in Germany is that the repayment takes place in a single amount, including the interest accrued , at the end of the loan term . A breakdown of the loan amount into installments like an installment loan is not provided for with a short-term loan, unless the borrowers pay an additional fee. Then you have a 2-installment option available. Another feature is the high interest rates for short-term or mini-loans compared to a long-term loan.