Online personal loans can be divided into the following types:
- installment loans – small loans for a short time with partial equal repayments;
- payday loans – instant loans, most convenient for borrowers.
In different countries, the ratio of microloans to GDP per capita differs:
- Germany – 6%;
- France – 11%;
- Switzerland – 12%;
- Great Britain – 16%.
In Poland and Hungary, this idicator exceeded 100%. In the United States, over 350,000 microloans are issued daily, and the maximum rate does not exceed 3% per day. In many European countries and American states, citizens at the age of 21 can apply for a small loan online.
What are the purposes of taking microloans in the USA and Europe?
Americans apply for short-term payday loans to earn money. Small business loans enable business owners to manage their operations more efficiently without interrupting production. In Europe, many MFIs issue exclusively business microloans and only a few can offer personal microloans. The terms for microcredits for business are different. The average annual interest rate can vary from 3% to 28%. Personal loans are issued at a higher interest rate and here you will have to pay from 4% to 41%.
Who uses microcredit services?
Payday and installment online services are mainly used by businessmen, who issue loans for business development and profit. American and European MFIs have a number of programs and special offers that contribute to profitable loan processing.
Prospects for the development of the online lending market
MFIs are gradually moving to a new level, introducing international experience into their practice. Europe and America have a great demand for personal loans, which can be obtained around the clock.
US online lending facts
- There are about 400 MFIs in the United States, of which about 150 are online lending services.
- Microfinance services are not legal in all states.
- Almost all online lending sites have a Spanish-language version. There are many Hispanic borrowers among the borrowers.
- The total cost of the loan depends on the state in which the borrower lives and is calculated individually, according to state law.
- On average across the states, the full cost of a payday loan is about 600% per annum. In the event of a loan delay, interest is charged at twice the daily interest rate.
- The borrower can provide the MFI with remote access to its bank account. When the required amount of money appears on it, the MFI writes off the debt.
- The MFI has the right to transfer debt to a collection company.
- The most famous and popular MFI in the USA is LendUp, founded in 2012.