Flash loan Student: a handy and fast mini loan for students!
Student borrow a small amount
A flash loan for a student , also known as a flash loan , mini loan , mini loan or SMS credit . These are loans of low amounts with a very short term. The loan gets its name from the fast flow of money. In a flash you have the money at any time of the day.
Flash credit usually involves a few hundred US dollars, up to a maximum of approximately 1000 US dollars . All maturities are less than three months.
It offers students the opportunity to easily and quickly borrow a small amount for unexpected costs, a coveted purchase or to bridge until the next income date. The similar variant in the United States owes its name to this latter purpose, where it is called 'pay day loan'.
The payday loan market came to the USA on 1 July 2017 . LendNow (originally from Finland) was introduced. There are now several providers.
How do you take out a student loan?
You can take out a flash loan by text message or on the internet .
If it is possible by text message , send a request to the provider to borrow a small amount. You will often receive a text message back with a number of conditions that you must read and for which you must agree.
About the same procedure applies online . You submit your request online, sign the necessary forms and your application will be assessed. Even then, if you meet the conditions, the amount will quickly be in your account.
The lender checks whether you meet the conditions . In most cases, the money will be in your bank account within a few hours.
Advantages of a mini loan for students
The most obvious benefits of payday loan have already been mentioned. The money can be collected in a fast and convenient way . This is a major advantage over the student loan from the Education Executive Agency (DUO) of the government. The application is only paid out on the next payment date and if you are unlucky, you will be late with your application for the next date.
In addition, a student loan is often one of the only ways for students to borrow money . Many banks provide limited loans to students because they quickly fail to meet the conditions.
When taking out a flash loan for a student, it is often not necessary to provide a payslip and you meet the conditions from a net wage of approximately € 1000.
Another advantage of payday credit is that borrowed amounts under € 1000 are not tested and registered with the Credit Registration Office ( BKR ).
Disadvantages of a student flash loan
An important disadvantage that actually for any loan money is that borrowing money always costs money . On an annual basis this is 13.99%. However, because you pay it back in a few months, it will ultimately cost you 1.17% per month. This remains to be seen.
Another disadvantage is that failure to repay on time can result in heavy fines . You also lose your own chance of further flash loans in the future in this way.
For students under 21, it is a disadvantage that they do not meet the minimum age and are therefore not yet entitled to this fast and convenient way of borrowing money. This also applies to students who have less than approximately € 1000 in monthly income.
When does the student have to repay the flash loan?
Each provider has its own repayment term (always less than 3 months). After these days you should have paid back the full amount including additional costs. Sometimes you can opt for a relatively shorter term at a lower cost.
The fight against payday loans by the AFM
The USA Authority for the Financial Markets (AFM) has been fighting a fierce battle against providers of payday credit for years. An AFM regulator calls this form of credit provision 'undesirable and harmful'. This mainly refers to providing loans to a vulnerable target group with a low income and few other options to borrow money (quickly and easily).
They are seriously concerned about the fact that in this way students regularly get even more into debt than the student loan they often already have at DUO. They are often better off with a temporary overdraft at the bank .
From May 25, 2011 it is mandatory to have a license with the AFM for the provision of flash credit. In this way the consumer is protected.
The AFM carries out strict checks with regard to compliance with the legislation regarding the granting of loans. Between 2011 and 2014, heavy action was taken against 11 providers or intermediaries of payday credit who tried to circumvent the legislation in various ways. These parties have left the market.
A number of other providers have settled abroad in recent years (for example LendNow) and from there offer flash credits online for Dutch people. For example, some providers can limit the AFM's power against unethical practices.
Guarantee for a student's payday loan
In 2018, a judge in Rotterdam banned the incredibly high guarantee that is often involved in payday loans. The maximum amount of costs is now equal to the maximum interest amount.
In the USA, the additional costs (often also referred to as administration costs or handling costs) may not exceed 14 percent for payday loans. This percentage of 14% is equal to the maximum interest rate that has applied since 2015 for all loans in the USA. The annual percentage rate should be mentioned on the website of the relevant lender.
With the court ruling just mentioned, costs for guaranteeing also fall under this maximum percentage . The guarantee is regularly provided by another party, but the judge has ruled that this still falls under the maximum amount.
Flash credit providers often disagree on this, because they do not approach it as a mandatory part. You can also let someone from your own environment act as guarantor . However, you may wonder whether it is still necessary to apply for payday credit if you have someone in your area who can help you financially in this way temporarily.
Need a flash loan as a student? Then think a few times before you take out the loan. If you really need it, you can always take out a mini loan.