The term SMS loan is a fairly broad concept as there are a number of different synonyms on the market that tend to describe the same form of process. Some of these include the following concepts (except the one already mentioned):
These are just the tip of the iceberg and, as we have already mentioned, describe the same product. However, they are usually referred to as a clear example of so-called high-cost credits. These have a common denominator, which is that they tend to be about relatively small amounts, ranging from a few hundred dollars to a few thousand.
They are also usually granted and paid fairly quickly without requiring any kind of security in return. Worth mentioning is the fact that many of them require a refund within 30 days where interest rates usually make up a large portion of the amount. Many realize too late that the amount they have borrowed suddenly costs almost as much as the loan itself, which is precisely the danger with SMS and telephone applications.
Many consumers who take SMS loans are not aware of the extra fees that apply to the loan itself. For example, you do not know that in addition to the effective interest rate itself, you also have to pay a set-up fee, which tends to be quite high, compared to the entire loan amount.
Dare to Compare
Before you get to take out a quick loan, you should take some time to compare the various effective interest rates of the operators with whom you wish to take the loan. You will certainly find that the fees and the various interest rates may vary to some extent depending on which players you choose.
What we recommend is to select at least three different companies that you find interesting offers. Then you weigh the various pros and cons of their offers.
When you have done that, you simply go ahead and set these against each other. For example, you could call, email or use chat (if possible) and explain that you want to take out a loan with them, but since their interest rate is higher than Actor X, you are split on how to proceed. In many cases, these players will offer you lower interest rates because they are keen to attract as many customers as possible, because that is what drives their business in the end.
So, by bluffing a little, just like in poker games, you can lower your interest rate a bit without it costing you anything, other than your precious time. We cannot give you exact figures on how much you will be able to negotiate the interest rate down because these will depend on your current financial situation, if you have any payment notes already, as well as how good you are at arguing your case.
What Happens If You Can’t Pay The Loan
Of course, the companies want their money back as soon as possible with the high interest rate you accepted when you took out the loan. When it comes to the crate, no one borrows money for free, but you obviously want to make a profit on what you legend.
However, it can sometimes happen that you as a consumer are unable to repay the loan that you have recently taken, which can cause some unpleasant steps that you must take seriously as they can result in serious consequences.
When the company sends the invoice, and the due date expires, and you still haven’t paid the invoice, the company sends a reminder fee and sends the case to debt collection. This usually comes with a fee of USD 180 at the time of writing, but it can of course vary depending on what you agreed on the loan itself.
If you fail to pay the loan even at this stage, the case is finally sent to enforcement authority who then runs the case. Of course, they will also put on their own overheads & relevant fees, which literally means that the longer time goes on, the higher the loan will grow, since you also apply a penalty interest rate that ticks for every day that goes by.
It is little surprise that the number of cases at enforcement authority has increased avalanche in recent times, especially with SMS loans, since people who take these types of loans already tend to have a rather scanty and poor economy, where the telephone loan can often constitute the death knell for their entire financial security.
Important to remember
Below we present some important points that we consider to be fundamental and decisive when it comes to fast loans and its various pitfalls that you may encounter. You should take these into account before choosing to enter into an agreement with a lender that lends you money, but in return requires an almost equal interest rate as the loan itself:
You should never borrow money that you know with certainty that you will not be able to repay within a month.
If your finances are already in a bad position, hardly a few thousand dollars will solve the problem, but you risk only digging a deeper financial abyss to yourself that you will find very difficult to get out of at a later date.
Interest rates tend to be soaring and the hidden fees can quickly accelerate to unexpected heights, especially if you take several quick loans from different players at the same time.
If your debt to the company ends up at enforcement authority then you will receive a payment note which will follow you for a full three years.
A payment note will make it very difficult to open up broadband or mobile subscriptions, write the apartment contract, get a home loan, car loan, etc.