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Loans – The Good, The Bad and The Ugh!

spainSometimes a loan is unavoidable. What about a new car or home improvements? It pays to check different loans options available and calculate just how much you’ll have to repay. Take a look at our guide on 8 ways to get a loan in Spain and their safety ratings.

1. At Work

Many companies in Spain will allow you to request an advance on your salary interest-free. Depending on how long you’ve worked for the company, and their loan policy, you may be able to ask for several months’ salary upfront.

Safety rating: Green

2. From a Bank

Not necessarily your own bank, although this is the best place to ask first. If you have a salary or pension regularly paid in then you’ll usually get a better interest rate. Remember to ask about both the interest rate and whether any commission is applied

Visit comparison sites such as Help My Cash or Kelisto for current rates from different banks.

Safety rating: Green

3. The Three F’s

Family, friends and fools. Loans from friends can be free, but can also lead to trouble. It’s usually a good idea to draw up a simple contract, even if no interest is to be repaid it shows that you’re serious about repayments.

Safety rating: Green-Amber

4. Use your Credit Card

For lower amounts you may decide it’s easier to use your free credit card (of course you’re not paying an annual fee – see our article!) and pay back in instalments. Just make sure you do your calculations first to see how much you’d repay in total.

Safety rating: Amber

5. Quick Loans

Companies such as Cetelem or Cofidis will make personal loans with annual interest rates from 7% to 20% (over double an average bank loan rate). These two companies are normally used by retailers in Spain if you finance a purchase and shouldn’t be confused with microcredit companies.

Safety rating: Amber

6. Peer-to-Peer Lending Websites

Although not mainstream they do offer an alternative way to get a loan. The main companies are Comunitae and Lendico, however the info available is not always clear and they are more expensive than a bank loan.

Safety rating: Amber-red

7. Microcredit Companies

Wonga, Vivus, OKMoney, and lots more – AVOID. In fact to make it easier we haven’t even bothered to include links to their websites. With interest rates of 1000%+ they’re not worth looking at.

Safety rating: Red

8. Offer your Car as Collateral

Several websites have appeared during the recession where you can get a loan if you pawn your car. If you’re really interested in finding one, just Google “empeñar coche en España” but be warned!

Safety rating: Red

Related Post: Five Expensive Things in Spain That Aren’t Worth It

Loans in Spain

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