Microcredits and personal loans what is the difference?
There are moments in the life of a person in which, either by an unforeseen event, by buying a good or embarking on a professional project, you need to borrow money. It is in that search for financing when you encounter different types of financial products. Among them are microcredits, which is not the same as personal loans. Before going into details about the main differences between the two, you should look back and learn about the history of microcredits to understand them better.
History of microcredits
They were born in Bangladesh in the 70s by the hand of Raymond Yanus, who in 2006 won the Nobel Peace Prize for the implementation of this way of financing. After studying in the US, Yanus returned to his native country and studying the needs of the population after a famine, he realized that it was more profitable than charity to give credits to people in need so that they could get by on their own. In fact, he personally endorsed the credits of less than 30 dollars that a banking entity granted to people with scarce resources and verified that almost 100% of the loans were repaid. To carry out his idea of leaving small amounts of money to disadvantaged with reasonable interest rates, he created GreenFund Bank.
This original objective of trying to end social and labor exclusion explains that microcredits are aimed at people with few resources so that thanks to them they can start a project that allows them to earn a living.
Microcredit vs. personal loans
- Guarantees. One of the characteristics that distinguish microcredits from online personal loans is that no guarantees or guarantees are required to obtain them. Unlike loans issued by traditional banks, to request a micro-loan you do not need to have any guarantor.
- Quantity As the name implies, the amount of money lent in microcredits is small, not normally exceeding 1,000 dollars. This contrasts with personal loans that provide the applicant with larger amounts.
- Return. What the two forms of financing that we are dealing with coincides are that both have to pay interest. Although the form of repayment is different: microcredits are usually returned at one time and in a shorter period of time than personal loans, which can be repaid in installments in several months.
If your profile does not fit the one required to obtain a microcredit and you cannot or want to sign a personal loan with a bank, you have the option of going to Seventies bank to request a quick loan of up to 5,000 dollars. A few minutes after filling out an online form you will know if you get the money you need without having to do complex procedures. In addition, in Seventies bank we do not ask for endorsement or payroll. More information in the sections: Loans without payroll and Loans without collateral.