There is no clear definition for small loans. Many banks and most consumers perceive loans of up to three thousand or five thousand euros as small loans, while a few financial institutions use the term as a synonym for consumer loans of all levels.
In contrast, the banking industry has agreed on a clear definition of the term immediate payment. This is the case if the loan applicant can dispose of the requested loan within two bank working days. In order to enable the immediate payment, the individual banks set a time by which they have to receive the application. The immediate payment must not be confused with the immediate loan approval. This only means that the borrower is immediately informed about the loan approval.
How does the instant payment work?
The prospective borrower completes the application for a small loan with immediate payment online. He sends both the loan application and the requested documents online to the bank, while personally going to a post office to carry out the Postident procedure. Some banks, which also have branches, allow their credit customers to have an identity check carried out in the bank branch instead of the postident procedure.
A special feature of identity control is that of credit institutions equipped with a Luxembourg banking license, since, unlike German banks, they are allowed to recognize a copy of their ID card transmitted online. This possibility gives the corresponding banks the opportunity to transfer the requested small loan with immediate payment within a single bank working day.
Banks with a German license can only pay out quickly to existing customers. Which documents have to be submitted for the loan applied for differs significantly depending on the bank. Some financial institutions refrain from submitting wage slips for an immediate payment, since the promised quick loan processing only allows a superficial review of the slips anyway.
Of course, even if the income statement is not submitted, credit applicants are obliged to provide honest information about their income and assets in the loan application.
Banks regularly charge higher interest rates for a small loan with immediate disbursement than for loans with a normal processing time. The interest mark-up not only serves to offset the increased risk due to the partial verification of the creditworthiness of an applicant, but is also levied by the banks because of the willingness of the borrowers to pay them.
The quick availability of the requested money is an advantage for the customer with a small loan with immediate disbursement. The fact that this pays a reasonable surcharge on the interest rate appears to most borrowers as meaningful when applying for a loan with immediate payment.
Given the large differences in interest rates for instant loans from different banks, it is imperative that each borrower obtain several offers and decide on the cheapest loan. An instant loan is cheap if it has a low effective annual interest rate and credit rates that match the disposable income of the borrower.