All people are sometimes faced with issues when a certain amount of money is urgently needed, and it is impossible to find the money. The only solution would be an online microloan. Almost everyone can get money from microfinance organizations since it is not necessary for you to provide your income documents or show your credit history. However, it is important to understand that microloans have not only advantages but also disadvantages. So why are no-credit-check loans and microloans a bad idea?
Disadvantages of Obtaining Loans at the MFI Office
You should be ready that a personal loan no credit check is not so good as it seems to be. Here are some of the main drawbacks of the offer:
- Unfortunately, MFI offices are not located everywhere, which might make it difficult for you to get to the final destination point.
- High-interest rates. A large interest rate is one of the main drawbacks of such loans; be ready to overpay significantly for the absence of strict rules. If we compare the annual percentage of an MFI company and in a banking institution, the difference is quite noticeable. MFIs offer loans with an annual rate of 500-600, while you can get a loan of up to 100 per annum in a bank.
- Short-term loan. In a microfinance organization, it will not be possible to take a loan for a year or six months; a month, a maximum of two months – this is what you can count on. As a rule, the term for granting microloans does not exceed 30 days.
- Late loan repay entails the imposition of penalties. From the first day of the loan repay delay, the debt accrual is applicable to you, which can lead to a debt hole; Therefore, before signing the contract, consider whether you can return the required amount in a short time.
- A small loan amount. It doesn’t matter if you go to the office or take a loan online, the amount of money you can count on is small.
- MFI offices only work on weekdays only and have a certain working schedule. Therefore, if you need money urgently in the late evening or on weekends, you will hardly get them.
- MFI companies use the services of data collection agencies – so the data of debtors can get to a third party.
- When making a request, the client indicates the amount of money and term for the loan to be repaid in full, but there is no guarantee that a loan will be received in the specified amount. The credit limit is set separately for each customer, and the amount may be less than a client has initially requested.
Should I Take a Loan From an MFI?
There is no yes and no in this case. It all depends on the situation the person is faced with. If you are sure to be able to repay the entire loan amount at the right time, then it is quite possible to use the services of a financial company.