Private Lenders – Payday Loans in Austria

Payday loans are very popular at the moment, especially since the financial crisis and the increased caution on lending by credit institutions. Such loans are therefore often preferred by borrowers, especially since there are less bureaucracy than when taking out a bank loan. The borrower can also rely on lending criteria that are understandable and can express a desired interest rate.


Peer-to-peer loans

Peer-to-peer loans

At the beginning of these peer-to-peer loans, customers were more likely to be borrowers who did not get any credit from banks. But now other borrowers have also realized that private loans are a lot cheaper than conventional loans from various financial institutions. For the private lender, the loans offer one way of generating high interest income compared to other options. Time deposits, interest for savings books or time deposits and the like offer momentarily very low interest income, which offer no real incentive to invest. But if you invest your money as a private lender, the return is greater. Since the portals for these loans from private to private usually have a larger number of members, the risk of loss for private lenders is not very high due to the diversification. And the general balance of risk is better the more borrowers there are. Because with these loans, the private lenders usually divide the total for one loan. Everyone adds a small amount, which reduces the risk.


Apply for a loan and have his credit rating checked

credit rating

The subsequent credit rating is decisive for the amount of the interest rate to be paid. If the borrower has no collateral or no own income, the interest rate will be correspondingly high.

The interest rate can therefore be very different, because debtors with collateral naturally have greater chances of lower interest rates and more willing private lenders. Here too, however, the risk cannot be entirely excluded that a loan will not be repaid. By creating a so-called risk portfolio from several private lenders, however, the good credit portals for peer-to-peer loans manage to limit the risk significantly. Nevertheless, the lender should also take a close look at the borrower.

In Austria, private loans were not covered by a separate portal for this type of financing until 2009. In January 2010, this provider was prohibited by the Austrian Financial Market Authority (FMA) from brokering credit because a bank license was missing and there was no trade license for credit brokerage. At the moment it has to be assumed that further projects of this kind in the area of ​​private loans in Austria will be a while away.