Myths about sms loans
There are many myths and rumors of sms loans being erroneous, so we think it might be appropriate to look at these myths and see how true they are. It is mainly young people around 20 years who take sms loans
At Good Credit, this is not true anyway. The largest age group with us is 25 – 34 years and only 27.5% of those who take sms via us are between 18 and 24 years. Almost 3 out of 4 borrowers with us are at least 25 years old. The average age of their affiliated lenders is 35 – 40 years.
There are many lenders that do not take any credit information
There are many who believe that lenders that offer sms without UC do not take any credit information at all. Even in one of our evening newspapers, a journalist wrote that there are sms lenders who claim that they do not take any credit information, it is part of their marketing, but it is completely wrong.
The journalist should know the difference between not taking a credit report at UC and not taking any information at all, but that may be too much to ask. The lenders who sign that they offer sms loans without UC do not take credit information from the Information Center (UC) but instead collect their information from another credit reporting company.
All fast loan companies are legally obliged to take a credit report and so do they, at least at present. Sure there have been some lenders over the years who have neglected this but they have been sold off. And the lenders who have taken credit information with too little information or been too generous in their assessments have often been warned by the Swedish Consumer Agency.
You usually pay several hundred percents in interest or more
You don’t. If you were to pay 200% in interest on what you borrowed, you would have to pay twice as much as you borrowed in interest. Example: You borrow USD 1000 and payback USD 3000 including amortization but it does not work.
Saying that the effective interest rate is 200% does not mean that you pay twice as much in pure interest as the effective interest rate is based on years and not weeks or months on which a regular sms loan is set up. An annual interest rate of 200% corresponds to a monthly interest rate of 16.6%, so if you borrow USD 1000 for 1 month, you pay USD 166 in interest, not USD 2000.
It is certainly no lie that the effective interest rate is often several hundred percent, but it is misleading to give the appearance of the interest cost would be several hundred percents.
The fast-loan industry is almost unregulated
Nix, the Swedish Consumer Agency has established clear laws and regulations that the fast-loan companies must adhere to and the Swedish Financial Supervisory Authority reviews them. On several occasions, high-speed mortgage companies that misconduct (usually due to slack credit ratings) have been warned and fined, and some have been banned.
This has meant that less serious high-speed mortgage companies have sharpened and those who have not done so have had to close down their business. This has given us more and more serious sms lenders, even though it is still a while until we have a completely room-clean industry.
In the autumn (2018), an interest rate cap and cost cap will also be introduced and the requirements for credit assessments will be tough, so the market is always regulated.
There are no free sms loans because they have a fee
This has been stated many times by the evening newspapers, but it is not true. There are certainly sms loans that are marketed as interest-free even though they have a certain fee, but there are actually free sms that have no interest or fees. However, it is important that you repay everything within the agreed time otherwise it will not be free anymore.
Everyone can borrow, whether you have income or not
No, it’s not either. There are lots of people applying for sms loans who get rejected for their applications. In fact, it is more common to receive a rejection than to be granted, which is because many have far too small margins to borrow. You have to have some kind of income to be able to borrow, although income from an extra job, a temporary job, a temporary job or a project job is often enough, sometimes even A-cash.