What are quick loans? When is it a good idea to take one out, and when is it not?

Do you need to take out a loan to buy a sofa, replace your boiler or go on holiday with your family, for example? Have you considered taking out a quick loan or a microloan? Today we explain what a quick loan is and why it is not usually the most advisable financial option.

What are quick loans?

Also known or referred to interchangeably as instant loans. They are financial products that allow you to receive a certain amount of money that you must repay within a very short period of time. These types of loans are different from others because they are granted quickly and usually have very few requirements, the most common being a national identity card or other form of ID.

Furthermore, these microcredits or microloans usually have high interest rates, with APRs of over 1,500%. In addition, high late payment fees are also applied.

Main characteristics of small loans or microloans.

In answering the question of what quick loans are, we have already discussed the main characteristics of these products, but let's briefly summarise their usual conditions:

- Small amounts: online, you will find that these quick loans are usually between €50 and €1,000. 

- Very short repayment period: normally, according to the contract, they request repayment of the amount borrowed in a single payment after 30 days, although there may be other offers that extend the term to 90 days.

- Few requirements for approval: with other types of loans, lenders study the consumer's profile, but in this case, companies do not usually ask for any requirements to access financing, and even offer quick loans to people who are on the ASNEF credit blacklist.

- Instant approval: because they ask for few requirements to grant the loan or credit, the approval and delivery of the money is much faster than with other financial products.

- High interest rates: the APR on these quick loans is rarely below 20%, with the most common commercial offers ranging between 200% APR and 1,500% APR.

- High fees for non-payment.

Quick loans as a last resort.

Due to their high interest rates and short repayment terms, as well as the obvious risks of default, quick loans should be a last resort, as you must have very healthy finances and be sure that you will be able to repay the money in one or three months, with interest, otherwise you will start to accumulate a very high debt.

Under no circumstances should you take out a quick loan to pay off another loan; look for other alternatives. If you need the money to buy an electrical appliance, for example, explore other financing options with the seller, such as going to the second-hand market, or there is also the option of asking a family member for a loan, avoiding quick loans as much as possible.

Can you claim back excessive interest on microloans and quick loans?

Yes, if your loan agreement includes disproportionate interest, you could claim back your quick loan or microloan on the grounds of usury or lack of transparency. At our office, we can help you recover your money and cancel your contract on the grounds of usury.