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Instant vs Traditional Bank Loans

For many applicants, instant credit looks like one of the easiest ways to get money. But is it really? If we talk about the procedure for obtaining such a loan, then indeed, from the side of a potential borrower, everything seems to be very simple and affordable. To get an instant loan, you just need to contact the lender, provide a couple of your documents (passport and any other identity document), write an application and wait no more than half an hour.

The whole difficulty of such crediting lies in the fact that in order to issue instant loans the lender is forced to soften his demands both in relation to the applicants themselves for receiving funds and in relation to the documents necessary for their execution. It turns out that as a result of the simplified lending scheme, the bank is unable to verify the reliability of the potential client. In such a situation, the decisive word will be said by the scoring system, which will decide who to give the loan to and who to refuse.

Why Are Instant Loans More Expensive?

Because of such an approach to the selection of potential borrowers, the banks themselves often suffer, because the largest percentage of unpaid loans is attributed to instant loans. Naturally, such borrowing would be absolutely unprofitable for the bank if they did not find something to compensate for their risks - interest rates on such loans, as a rule, have a transcendental value.

Those citizens who have already used the services of bank lending more than once have noticed that the more affordable it is to get a loan, the more it is necessary to pay for it.

Of course, in this case, instant loan is no exception. In pursuit of compensation for possible risks, banks set incomparably large annual rates on such loans - as a rule, not less than 35%. By the way, it is not uncommon for lenders to insure insurance for additional security, and this, as is well known, will lead to an even greater appreciation of the loan. Also, many banks still do not see anything wrong in charging a fee for issuing a loan. In addition, throughout the entire loan period the borrower will have to face some other bank charges.

Based on the above features of instant borrowing, it is advisable to take such a loan only when you're short of time and need to get money instantly, in other cases it makes sense to take a closer look at the classic loan schemes. Always check how much you will pay for the loan before applying for it.


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