Lenders who give micro loans a bad reputation
December 18, 2019
I have always defended that there are micro loans on the market as I do not think the loan itself should be banned. Just because I myself think it is too expensive does not necessarily mean that others do too. But there are lenders that I don’t think have anything in the market to do.
I have stated several times in the past that I do not like this with an application code. To pay to apply for a loan and then only get rid of the money if the loan application would not go through, I do not like at all. Although this is only about USD 25 or something, I do not like it at all.
But unfortunately there are companies that are significantly worse than that. Cashking.nu is one such site that one should stay away from. Cashking is not the company behind it, but it is Capital Adventure KB. You can do a search on Google yourself and you will find what others have written about this company, you will of course get your own opinion about them but I guess you will not be positive immediately. Here I will only talk about what they say on their own page.
Sweden’s largest intermediary
They say that they themselves are Sweden’s largest intermediary of SMS loans and that may be true since I do not come across someone who works directly in this way. Then I guess they mean they are some kind of Lendo fixed for micro loans.
If you look carefully at it all, we here at Alltomlån.com could also be counted as an intermediary of SMS loans when we actually have links to such sites. If you count in this way, I would guess that Cashking is no longer the largest in Sweden on this, even though we are not the broker of more loans. Definitely think that there are other sites here on the net that convey more loans than they do. But that’s just a guess on my part. If I do a search on SMS loans, SMS loans or micro loans in Google, I will not find them on any of the first pages of the search results, which indicates that they have no huge amounts of traffic. But they may get traffic from keywords other than the most common.
Brokerage fee / Organization fee
This is by far the worst thing about this loan broker. Lendo and other loan brokers do not pay at all by the borrower because they are lending a loan. Instead, they get paid by the lenders because they have acquired a customer for them. In exactly the same way it works on all websites where you can find loan comparisons etc. Our site is no exception.
However, cashking charges USD 495 in a mediation fee. This is similar to what many lenders charge if they lend money in the form of a private loan. They then call it a set-up fee and should cover costs that lenders have in the form of work, etc. for a loan to be created. Usually, this fee can be negotiated off or they simply do not charge any setup fee.
However, Cashking has taken this a bunch of steps further as they charge USD 495 in Mediation fee / Posting fee, regardless of whether an application is then approved or not. So it is quite possible that a person who wants to borrow money has to pay USD 495 for having submitted an application which is then denied. This if something screams to me that you should avoid this lender.
Effective interest rate
Effective interest rate is the interest rate you get if you combine all the costs incurred with a loan and then knock it out on an annual basis. Because micro loans are short, the interest rate here is very high. This was the brief explanation of what effective interest rates are. Now why I find them a little interesting.
They say that the effective interest rate for a loan of USD 1,000 is 1,410.33% since the cost is USD 250 for the loan and the money is borrowed for 30 days. Certainly that sum I also get when I enter these numbers into such a calculator.
What they then chose not to include is their brokerage fee. In purely legal terms, they may not have to count it, since it is actually not those who lend money without someone else where it certainly costs USD 250 to borrow this amount. However, a person who borrows via Cashking can really pay this so the total amount for this person will be higher and if you put on their 495 USD on the calculation you get an effective interest rate of 87 367%. Which just sounds “a bit” high in my opinion.