A credit war is currently being waged among financial institutions for offering the best loans by lowering rates and eliminating commissions. Discover the entities that offer the cheapest credits, compare among the best offers and choose the one that best suits your needs:
What we understand by the concept of “war of credits”
The “war of credits” waged in the financial sector had its origin during the economic crisis of our country when the banks closed the tap of the financing and it was very complicated for the ordinary citizen to obtain the credits he needed. It was then (between 2008 and 2009) that private financial entities began to become popular.
These financiers offer mini-credits of up to 1,200 euros to solve small specific economic contingencies up to quick credits of greater magnitude, for example of up to 5,000 euros, to finance larger projects. and with higher repayment terms.
In recent times, due to the improvement of the national economy, banks have opened their hands in terms of the granting of credit, although they have found a great competitor: financial institutions with private capital. This fact, together with the low interest rates and the new measures taken by the Bank of Spain in March to encourage consumption, has led banks to start offering their financing products with much more attractive conditions.
How to identify loans with the best conditions?
The number of loans marketed within the financial market has not stopped increasing this last year, so comparing the conditions of all these products and knowing which of all the personal loans available is the most convenient is somewhat complicated. To facilitate the task, below we will see what all the aspects that we must take into account when comparing several credits:
- Interests: all loans that have interest rates below the average APR will be considered cheap. It is important to look at the TIN, although the APR is more relevant since it also includes commissions and other extra expenses that the loans may have.
- Commissions: the most common are those of study and opening, however, loan, with the current war of credits there are many banks that have eliminated all commissions. If we are facing a loan with commissions we can try to negotiate with our entity so that they eliminate them or look for other loans without commissions in other entities.
- It is important not to finance them with the loan, that is, to pay them together with the monthly installments of the loan, since then interest will also be generated on this amount and we will end up paying more.
- Related products: the future of financing will not include links. In fact, there are many entities with which we do not have to contract any additional product to access the credits we need. However, there are some entities that offer discounts on their interests in exchange for the voluntary contracting of certain products. In this case, we must calculate which will be the cheapest option if the cost of financing or some interests without lowering.
- Additional expenses: sometimes, there are extra expenses not linked to the loan itself, but which indirectly make the financing we request more expensive. The maintenance fee for the associated account or notary expenses are some examples. The best personal loans will not have extra expenses for your financing.
In summary, the cheapest loans are those that have an interest rate that does not reach two figures, that has no commissions of any kind and that either does not include linked products, or their links are free. Besides the price, it is also important to look at the speed of the concession, because we can find credits that can be requested through the Internet without having to do many procedures and that are approved or denied practically instantly.
The role of the fintech in the “war of credits”
The term fintech comes from the English words “finance” and “technology” (finance and technology) and refers to all products and services that use new technologies to offer better forms of financing.
Private lenders have been using new technologies for several years to improve their loan conditions. Thanks to fintech, these companies can offer their products and services online, perform credit analysis automatically, respond to requests almost instantly and transfer the money to the client’s account in a matter of a few minutes. Unlike what happened during the previous decade, when the only way to obtain financing was through banks with a long process and full of procedures, now it is possible to get credits in a single click and in a single day, without having than moving to an office.
Now, with the credit war that is being waged in Spain, banks have also started to use fintech in their favor. Many entities have begun to promote their new loans online, which do not require just paperwork and are transferred in a few hours, sometimes even instantly. In addition, other financial products such as credit and debit cards, checking accounts and bank transfers are also incorporating new technologies, with services such as digital wallets or payments through mobile applications.
Requirements to apply for new credits
The increase in competition has somewhat softened the approval conditions of the banks, although the requirements that conventional financial institutions require remain tougher than those of private equity companies. The conditions of access to credit can vary according to the risk criteria of each lender, although in general, they all agree on the following:
- Be of legal age: we must be at least 18 years old, although some entities require us to be over 21 or 25 years old.
- Be resident in national territory permanently
- Enjoy periodic income: to be able to access the credits that we need we must have a monthly income, justifiable and sufficient to face the loan installments.
- Not be registered in files of defaulters: to be able to access the financing that we need we must be free of debts. Although with the increasing war of credits some entities begin to offer credits with ASNEF. In order to access these personal loans, if we appear in these files, we must generally comply with two additional conditions:
- Amount: that the debt does not exceed 1,000 euros, although some entities set their limit at 200 or 500 euros, although it will always depend on the lender and its risk policy.
- Provenance: the debt cannot be linked to a bank, that is, it can not come from credit cards, bank loans or overdrafts.
These requirements will be harder the higher the amount of the loan requested because the entity will want to reduce the risk of default. In addition, it is possible that some entities ask us to meet certain conditions of connection to access their credits, such as opening a current account, directing the payroll or contracting several linked products such as insurance or cards. However, with the current credit war, there are fewer and fewer entities that demand compliance with these requirements, especially those that operate through the Internet.
3 documents required when requesting personal loans
To demonstrate that we comply with the aforementioned requirements, when we apply for credits we will have to deliver a series of documents in which relevant information about our purchasing power and indebtedness appears. With this documentation, the entity we go to will analyze our risk profile and, at the same time, ensure that we are who we say we are. These are the documents that we will have to present in most cases when we request personal loans:
- Identity document: DNI or NIE that verifies that we are of legal age and resident in Spain.
- Proof of income: a payroll, a pension, the IRPF or any document that certifies that we enjoy the regular, justifiable and sufficient income.
- Bank statement: so that the entity knows our monthly income and expenses.
Some entities will demand more documentation, however, the tendency due to the war of credits is that they ask for less and less paperwork. Some private financial entities offer the possibility of requesting credits without paperwork and identify us through a mobile application.
On the other hand, some banks have also implemented the same (or very similar) service as fast loans without paperwork to offer faster and more conventional financing. In this way, if we are former customers of the bank, we will not have to deliver just documentation, as it will have all the necessary information to perform the stipulated procedures.
Basic forms of online loans
To apply for payday loans via www.paydaynow.net/ site, you just have to fill in a simple online form so that the entity can perform the analyzes prior to the approval of the application. Depending on the lender, the required data may be one or the other, but the vast majority of entities offering online loans will ask us to provide the following information:
- Amount and term: money that we need to request and the number of months (or the monthly fee) in which we want to repay the personal loan.
- Personal information: name, surnames, identity document number and date of birth
- Economic data: type of monthly income that we receive (payroll, pension, etc.), amount of the monthly payment, monthly expenses (mortgage, rent, …)
- Labor data: studies, work, sector, type of contract, seniority in the company, …
- Credit situation: if we have a valid loan, what is the monthly payment we pay, if we have any unpaid debt or we are registered in a file of defaulters as ASNEF.
- Contact information: telephone, the current address of residence, the time we have been living there, email or any means of communication between the entity and us.
With this information in the online form, the entities will be able to carry out the credit analysis prior to the grant, verified by the documents delivered, in a few minutes and offer us an answer as to whether or not our funding request has been approved. In the case of having been approved, they will send us the contract that we will have to read carefully and sign if we agree with all the conditions. It is important to keep in mind that signing the contract means that we are in agreement with all the rights and obligations that appear.