Small financial companies made a breakthrough last year and increased their lending to the population 5 times. The non-banking market issued USD 26.9 billion in 2017. loans – this is 20% of the loan portfolio of individuals throughout the banking system.
What is the secret to success? Microfinance institutions attract customers with flexibility:
- They are less demanding;
- There are more of them;
- They are quicker to decide on a loan.
Many financial companies have gone even further, allowing borrowers to get a loan online through their websites or various aggregator platforms. What is the essence of this service and do they have competitors?
What is an online loan?
The essence of the service is that the client submits via the Internet not only an application for a loan, but also directly receives a loan online without leaving home. There is no need to visit a bank branch or an office of a microfinance company – the client enters all the data through the site interface, the agreement is sealed with an electronic signature. It usually takes less than an hour for financial companies to consider a completely new application; regular customers get a solution even faster.
Credit is received online to the bank card. Usually lenders work with cards of all Ukrainian banks. On the part of banks, a transaction is executed as a regular p2p or b2p transfer from a card or account of a financial company to an individual’s card.
Who gives online loans
Banks, financial companies, pawnshops and credit unions are engaged in lending to individuals in Ukraine. Only individual financial companies work with online loans. Some market participants under the guise of “online credit” offer customers to leave an online application on their website, but to get money, customers will still have to go to a bank branch or office of a financial company.
In the case of banks, you can get an online loan (both by standard replenishment of the card, and by remote expansion of the credit limit), but for this, by default, you need to be an active client of a particular financial institution. And this almost always means a visit to the department. Exceptional cases are remote identification and courier delivery of a credit card to your home. But this is also not the fastest process. If you need money urgently – this is not an option.
Microfinance Organizations (MFIs) provide this opportunity. True, the amount of such a loan will be small – within 5,000 hryvnias for new customers and 20,000 hryvnias for regular users of microloans. There are time limits. A quick loan online can be obtained for no more than 45 days. Most MFIs issue only a month.
How to get a loan online
The conditions for most financial companies are typical: in order to get a loan to a new client, you need to enter your details (key – phone number and identification code) and indicate the card number to which the money will be sent. Some lenders may ask for a scan copy of the TIN and / or photo of the client with a passport in their hands.
A bank card is often also asked to be confirmed: for this you need to make a payment of 1 hryvnia, which will be returned to the account after verification of the card. Important! Never forward or give a PIN code or any SMS passwords. Scammers are interested in such data!
In most cases, adult citizens of Ukraine can apply for a loan online. Sometimes financial companies limit the upper age threshold for a potential client: as a rule, it is 75-80 years.
With the introduction of information, registration on the lender’s website also occurs. Using an existing account, attracting subsequent loans will be easier and faster.
Many organizations claim that it takes them up to 15 minutes to review the application, but this is not always the case – in some cases, the first identification of the client can last up to several hours, as the company analyzes the credit history of the potential borrower and verifies the information indicated by him.
It is important that the card, on which the money should come, be issued specifically for the loan applicant – the account of relatives or friends will not work. Enrollment usually passes quickly – within a few minutes after the application is approved.
How to choose an online lender
There are quite a lot of offers on the market – to select options it’s enough to enter a query in the search engine like “online credit on the card without leaving your home” or use the comparison services of organizations where you can get an online loan. Both the first and second options most likely will not give a complete picture of the market, but they will help to orientate at least in its most active and stable participants.
There are no universal criteria for choosing a financial company. It is important to make sure how long it has been working in this market (when it received the license of the National Financial Services Commission), read the terms of cooperation, and see the standard form of the contract. A law-abiding company should publish all these documents on its website.
Another important point is the level of protection of the financial company’s web resource itself: the website address in the browser should begin with the abbreviation https (and not standard http). The https protocol means that the personal information of the client will be transmitted to the site owner in encrypted form, which is fundamentally important for serious credit institutions working with data.
How much is it
Credit services of microfinance organizations are focused on quick loans of small amounts. Therefore, their interest rate is indicated daily. Usually it is 1.3 – 2% per day. It runs up to 730% per annum per year. In comparison with this indicator, banking 20-30% per annum no longer seem unbearable.
Microloans benefit from promotional offers. Often you can find loans for new customers for a symbolic 0.01% per day. This is true, and you can use borrowed funds almost for free. True, the action of such shares applies only to new customers. The amount of “zero” loan is also limited (up to 5000 USD.).
The commission is usually included in the daily percentage, but there are companies that charge extra. This should be spelled out in the loan agreement.
How to repay an online loan
Typically, financial companies offer several repayment options:
- This can be done in cash (via Privat terminals, non-bank payment terminals such as iPay or EasyPay)
- By card – this option is usually available in the personal account of the borrower on the lender’s website.
- Transfer through the cashier of any bank. A typical purpose of payment is to replenish a financial company account in one of Ukrainian banks.
Is it possible to repay a loan ahead of schedule? Microfinance organizations charge a fee for using a loan daily. The sooner you repay the loan, the less you will have to pay for using it.
You will not receive any global advantages (for example: discount on subsequent loans), but add a positive line to your credit history. Most financial companies do not charge extra for early repayment of a loan, but to know for sure, it is worthwhile to carefully study the loan conditions in the contract and on the website.
What will happen if you do not repay the loan on time
Sanctions are different in every credit company. But in general, debtors will have to do the following:
- From the first day of delay, promotional tariffs are canceled, and the loan fee begins to be fully accrued.
- Along with the interest for a loan online to the card around the clock in the amount of debt there is a penalty – 2-3% daily. In this case, the amount is calculated in compound interest.
- The manager of the company will call the debtor and his authorized representatives indicated in the loan application and remind them of the need to pay the debt and that the amount is growing every day.
- The case is being sold to a collection company or a lawsuit is being filed.
So is it worth taking a loan from an MFI? If you need a long-term loan for a large amount – definitely not. Microcredits are a hand of emergency financial assistance, an opportunity to “re-pay until salary”. Before making a decision, it is important to evaluate your ability to pay off the lender, whether it is a bank or a credit institution. It is really important to study as much as possible all points of the agreement before the conclusion of the transaction. This will help avoid unnecessary difficulties for all parties.