We often hear about the term fast loans or sms loans, not least in the media, but what do we really mean when we say fast loans? In fact, any unified definition that everyone agreed to does not exist but common to these loans is usually that the loan is paid off relatively quickly and without collateral.
Loans without collateral are not in themselves a new phenomenon. The name fast loans began to be widely used in Sweden in 2006, in conjunction with the fact that new technology made it possible to apply for a smaller loan directly on the mobile or on the internet.
Estimated and peeled loan form
Many customers appreciated the quick loans, when it was felt that the loan form filled a gap in the established players’ offerings by offering a simple way to quickly apply for a smaller amount.
Previously, it had often taken several days to apply for a small loan from one of the major lenders. Ideal for anyone who received an unexpected expense that needed to be resolved quickly, many customers thought.
But the quick loans also received a lot of criticism, often because of what they thought were unreasonably high interest rates. Rogue players also flocked to the industry and for a few years it was something of a wild west on the market.
The fast loan market is regulated
Finansinspektionen (FI) did not keep up with the turns, but once the authority woke up, the market was gradually regulated and several rogue players were eliminated. Since 2014, a special permit has been required from FI to conduct credit towards consumers.
Among the first companies to obtain a license from FI was the fast-loan company Credigo. The permit means that the business is controlled by FI, which must continuously ensure that it meets the requirements that exist. Companies that do not manage can get rid of the permit and thus cannot lend money.
In line with this and other rules stricter, the market for fast loans has matured and the number of players has decreased.
What do quick loans have in common?
Apart from the fact that the loan is often paid out immediately after an approved credit check, it is also common to have a short repayment period, often it is between 30 and 90 days. It is also common that you can apply for a smaller amount without UC, which is not the same as borrowing without a credit report. All companies are required by law to do a proper credit check.
Instead, several high-speed mortgage companies have chosen to work with, for example, Good Finance, which takes a credit report but does not register it. Therefore, creditworthiness is not adversely affected by an application, unlike UC where each application is registered and the amount of inquiries may affect the future creditworthiness.
Think before you borrow
As with all loans, you should think carefully before taking a quick loan. Some players are attracted with interest-free loans for the first time, but wonder if you really need the money. If you find that you really need a small loan, be sure to compare the terms of the various lenders and don’t forget to look for hidden fees.