Credits and loans can be classified several times – because of the period, because of the risk to the institution, because of the repayment method, because … it could be exchanged for a long time. One of the possible qualifications is also because of the amount of the loan or credit. In our conversations with clients, the question often arises: Is a small loan possible? How much can I borrow? Is it worth having a few hundred zloty to try to apply for funding at all?
Is a small loan profitable for the institution?
Each client application is operating costs for a bank or non-bank company. The application must be accepted, checked in the databases and the customer’s creditworthiness verified. Even if these activities are 100% performed by the machine, verification in databases costs money. The price depends on the scope of the verification and the contract the institution has signed with the information provider. At the very end, individual customer check may cost up to PLN 30. If the process is man-operated, the cost increases by its time. To all this, there are also the costs of acquiring the customer. With a loan of several dozen thousand, the sum of the costs associated with handling the application will only be one million of the loan granted. It is worse if the customer applies for several hundred zlotys.
Banks are reluctant to give small amounts
We will find few offers on the market in which the bank offers us cash amounts from 500 PLN. There will be several banks with a minimum sample of PLN 1,000. However, the standard on the market is PLN 3,000. It is from her that we can look for offers in most banks on the market. The truth is that even a loan of PLN 3,000 granted by the bank will be on the verge of profitability. However, banks give such amounts in the hope that the customer will come back for more in the future. It is known that a new transactional customer is at a premium for the bank, and the customer who took the loan and repaid it all the more.
A small loan in a non-bank company
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The average loan granted on the non-banking market is acc. BIK data statistically approx. 4 times lower than consumer credit in a bank. Small loans for loan companies are therefore standard. Of course, the costs that a company must incur to process are – and often higher than the bank has, because access to BIK for such companies may be more expensive. Loans offered on the non-banking market are, however, more expensive, so higher fees, in addition to the risk and costs of raising capital, also offset the company’s operating costs.
A small loan is a risk diversification for a difficult customer
Non-bank companies also diversify the risk by granting small loans. It is better for them to grant 10 loans for PLN 1,000 than for one loan for PLN 10,000. It is all about the risk of not recovering amounts due from the customer. A non-bank customer does not pay back more often than a customer in a bank.
We have no choice, i.e. a small loan to start with
We will often encounter a situation where we have no choice and the non-banking company will immediately offer us a small loan, with information that if we repay it on time, we will be able to take a larger one. In this way, companies minimize the risk associated with granting a loan to a new customer who has not borrowed from them yet. With a small loan, they check whether the customer is trustworthy and whether he will repay his commitment. Another proposal for the customer may already be higher – even twice.
Small loan and period
We have to reckon with the fact that small loans are for shorter periods. It makes no sense for an institution, for example, to grant us a PLN 500 loan for 36 months. Therefore, a loan of several hundred zlotys will either be payday loan, i.e. repaid with one installment, or a multi-installment loan, but with a short, uncomplicated period of several or several months. Short periods also mean risk minimization for institutions. The statistics are such that the longer the repayment period, the worse the commitment repays.