3 out of 4 instant loans are expensive and risky

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For consumers, there are currently four ways to get money at short notice: Credit facilities and credit cards are offered by all banks in Germany. Providers like Vexcash, Cashper and Xpresscredit offer short-term loans, also called Payday Loans. So far, consumers in Germany can only find an instant loan with one supplier .

Credit level in comparison

The amount of the loan can be freely selected only for short-term loans and instant loans. With credit facilities and credit cards, the credit line depends on the creditworthiness of the borrower and regular cash receipts.

credit category loan amount
  line of credit not freely selectable; depending on creditworthiness and regular cash receipts
Credit card not freely selectable; depending on creditworthiness and regular cash receipts
Short-term credit freely selectable; 50 – 600 euros (for new customers)
instant credit freely selectable; 1,000 – 5,000 euros

 

Running time in comparison

The duration of the loans is very different. Short-term loans offer the shortest term. The longest maturities are available in Sofortkredit, Scheduled Loan and Revolving Credit Cards.

credit category running time
line of credit unlimited, until full repayment
Credit card Batch credit cards: 30 – 60 days
Revolving credit cards: unlimited, until full repayment
Short-term credit 7 – 62 days
instant credit 36 months

 

Cost in comparison

There are also big differences between an instant loan, a credit line, a short-term loan and a credit card. There is no need to pay interest on charge credit cards. The highest interest rates are for revolving credit cards and short-term loans. Benefit consumers with short-term loans the option of express processing and payment increase the interest according to financial tip on over 170 per cent.

credit category Cost (interest) in comparison
  line of credit very high interest costs ( according to Stiftung Warentest Ø 10%)
Credit card Batch credit cards: no interest charges
Revolving credit cards: very high interest costs (according to Ratgeber-Geld.de and credit card.net up to 25%)
Short-term credit very high interest costs (7.95 – 13.90%)
instant credit low interest costs (4.99%)

 

Payout speed in comparison

If you need money fast, you can not and do not want to wait long for the payment of the money. Consumers get their money the fastest by using a credit line or a credit card. It takes a few minutes longer in the case of an instant loan. This must first be requested. Thanks to fully digitized processing and automated payment, it only takes a few minutes, according to Nancy Drew. In the case of short-term loans, consumers wait up to 15 days for their money.

credit category Payout speed in comparison
  line of credit Money is available immediately.
Credit card Money is available immediately.
Short-term credit Normal case: Money is paid within 3 – 15 bank days.
Special case: For an extra payment, the money will be paid within 30 minutes to 24 hours.
instant credit Money is available immediately.

 

Risk of multiple, follow-up or permanent debt in comparison

Who lends money, is in debt to repay it. The repayment modalities are very different for an instant loan, credit line, short term loan and a credit card. Due to a predictable, regularly and evenly distributed repayment and a long maturity, the risk of multiple, follow-up or expensive permanent debt for consumers in an instant loan is the lowest.

credit category Risk of multiple, follow-up or permanent debt
  line of credit high, because no regular and regular repayment is planned and continuously very high interest rates are incurred
Credit card Batch credit cards: high, due to the short term revolving credit cards: high, due to the lack of amortization and high interest rates
Short-term credit high, due to the short maturity and high interest rates
instant credit low due to the regular repayment and low interest rates

 

Decision support: What is to be considered with which credit?

  • A credit line offers fast money, but is expensive, incalculable and risky. It should be used only in exceptional cases and then only for a short time.
  • A credit card also offers fast money. But it should also be used only in exceptional cases and only if the loan can easily be repaid with a one-off payment the following month.
  • A short-term loan is extremely expensive and not an option for those who want to borrow money quickly, safely and cheaply. It should only be used in exceptional cases and only if you can wait up to 15 days for the money and repay the loan easily with a one-time payment.
  • An instant loan is the right option if you want to borrow money at the lowest possible interest rate and the total amount can not be repaid immediately as a one-off payment.