Small Loans from Private Individuals
Small loans by private individuals are granted relatively frequently, because loans with only a very small loan amount can often be lent by a private lender alone, while loans with higher sums are almost always requested first from the bank.
Small loans from private individuals can count as credit even from a sum of 1 cent, even if this circumstance in the practice of course is rather rare, because often private individuals are given rather loans in the double-digit to middle four-digit range. The small double-digit loans are often found among friends or family members when a person lends a very small amount from another person for a short time to buy or for the evening, for example, because their own wallet was forgotten at home.
Although these loans are never perceived as actual loans in the general understanding, but meet all the necessary conditions, provided that the person who receives the money must actually pay this back to the other person.
Due to the spontaneous nature of these loans, no extra document will be made as a credit agreement for such a small sum, but the effort is simply not worth it, even from the point of view of the lender. In addition, one has within the circle of friends and family anyway a high degree of trust each other, so that one can assume that the money is also back to the lender.
Loans from strangers
Small loans from private individuals can also be awarded to people who are previously completely foreign and thus have no personal relationship to each other. These loans are often brokered on the network via separate portals, where on the one hand the lenders but on the other hand also the borrowers can register. Borrowers may post their request or project following their application and have it financed through one or more private lenders.
The amounts can range from small four-digit sums to mid-five-figure sums, with the likelihood that the desired sum is actually achieved, of course, with increasing amount of these also reduced. Small loans from private individuals are also associated with such portals with collateral that the borrower has to present to the portal and thus indirectly to the lenders.
As a rule, the identity of the applicant is checked, as well as the rating within private credit and various other rating services (CreditReform). The interest burden on borrowers is quite high, as private lenders want to hedge their investment in the best possible way, and it is clear to all those involved that these borrowers were rejected in advance by banks.