Quickly borrow money via internet or SMS and have the amount in your account within seconds. You call this type of loan flash credit. It seems attractive if you need money just as quickly, but in practice it appears that there are very high costs involved. In addition, you are not sure whether you are dealing with reliable parties.
Did you know…
The difference between the most expensive and cheapest loans is on average 700 USD per year? Do you also pay too much for your loan?
What is a flash credit?
A flash loan is a loan with a short term (15 to 45 days) and a relatively low loan amount (usually 100 USD to 800 USD). These loans have been offered in the Netherlands since 2007 and were primarily aimed at people with acute money shortages or people who were difficult to take out a loan with the bank because of a BKR listing. BKR testing did not take place with regard to flash loans and you could have access to the money relatively quickly.
Since 2011, however, flash credit providers have been subject to the supervision and rules of the AFM. This means that all flash credit providers are obliged, among other things, to take a BKR test before they grant a loan and they may not, for example, charge advisory fees for the loan.
Pay attention! This does not mean that all providers are also licensed by the AFM. The AFM does supervise these providers.
Flash credit costs
Because the duration of a flash credit is short and the loan amount low, the interest rates that you pay are high. Usually the interest rates for flash loans are around 15 percent! This is the maximum legal loan interest that is permitted for a loan.
Administrative and advisory costs for flash credit
In addition to the interest costs, the flash credit providers also charge other costs, which makes a flash credit very expensive. For example, you often pay extra for additional services, such as drawing up a quote and processing the request. You also sometimes receive mandatory advice about the term life insurance. Depending on your loan amount, this advice costs 19 USD to 143 USD.
Flash credit guarantee
Flash credit provider Good Finance also requires you to provide a guarantee. This can be done by, for example, a friend or family member who wants to guarantee your loan. But you can also ‘buy’ a guarantee through the company Best Lender. With a loan amount of 100 USD and a duration of 15 days this already costs 22.43 USD. That amount can go up to around 242 USD with a loan of 800 USD with a term of 45 days.
Flash credit – Alternatives
Because a flash loan is a very expensive form of borrowing that involves a lot of extra costs, it is smarter to take out a loan at the bank, for example by taking out a personal loan or revolving credit. By comparing well in advance, you know for sure that you do not pay unnecessarily much, unlike the flash credit.
Comparing providers well is very easy! Indicate online what your wishes are and we will show you the largest selection of loans, arranged by lowest interest rates and best conditions.