Basically, a sms loan is a type of private loan since the definition of private loan is that it is aimed at private individuals, does not require any security and is used for consumption. However, there are some differences between regular private loans and sms loans.
Sms loans have faster processing times
You probably know that it usually takes up to 24 hours to get a definitive response to their loan application when you apply for a private loan. Then it takes up to 3 banking days for the money to be in the account after the loan agreement is signed and has reached the lender. It may not matter that much if you are going to borrow a larger amount of money and / or want a low interest rate, but if you need to borrow money quickly, it is of course taken for too long.
Many loans are already paid on the same day if you make your loan application in the middle of a weekday, otherwise you will receive the loan the following weekday. In addition, there are many lenders who pay sms loans directly to certain banks, which means that you can get your money right after the loan application is approved. These loans can often be paid on weekends.
Sms loans have lower requirements
Most private loans have quite high requirements, you often have to earn at least USD 120,000 – 200,000 per year depending on the bank and you may not have any payment notes. If you do, you can, in some cases, only borrow smaller sums. This means that you who do not earn so much and / or have a payment note are not able to take a regular private loan, but it is not at all impossible to take a sms loan in these circumstances.
There are many sms lenders that you can apply for a quick loan with payment note at and most have fairly low income requirements. Sometimes it can be enough to earn around USD 20,000 – 50,000 / year to borrow money.
Sms loans have a higher interest rate
Sms loans have a clearly higher interest rate than private loans, which is because:
- The loan is smaller and has a shorter maturity. It would simply not be profitable to lend say 3,000 USD for 30 days and offer the same interest rate as a private loan.
- Sms loans entail a higher risk due to the lower loan requirements.
But many times a sms loan doesn’t have to be that expensive because the loan is small and the term is short. For example, you can borrow USD 3,000 and pay USD 100 – 200 for it, plus you can find sms loans that are completely free. Then you only pay back what you borrowed and not a penny more.
Sms loans are smaller and have a shorter repayment period
When the fast loans went through, the amounts that were lent out were rarely greater than USD 3,000 – 6,000, but that doesn’t really look like today. Today, there are many sms lenders offering fast loans of up to, for example, USD 12,000, 20,000 or USD 30,000.
However, larger loans usually have a longer maturity (ie the time between the day you took out the loan and the day the loan is to be repaid) than the smaller loans. The purpose is to facilitate the borrowers’ ability to repay the loan. The lowest amounts usually amount to USD 500 or 1,000, but there are even lower loan amounts than that. Typical maturities for sms loans are usually between 14 – 90 days, but some lenders offer maturities of up to one or two years.
This type of loan is also called interlibrary loan and is one of the most common types of loan. The interest rate on a private loan is also relatively high, for example, when compared to a mortgage, since the loan in question has no collateral. A typical private loan from the bank has previously been around USD 10,000 – 350,000, but can vary widely between amounts today. Today there are private loans up to both USD 400,000 and USD 500,000 and some private loans can be only USD 5,000.
The repayment period here differs from the fast loans. When you take out a private loan, you can repay it in about 1-12 years. However, you should keep in mind that the loan becomes more expensive the longer the repayment period due to interest costs.
If you need to borrow less than USD 5,000 or USD 10,000, then sms loans are your only option, but if you want to borrow larger amounts, ie you have thousands or hundreds of thousands of USD, you must take a private loan.