What is the difference between a loan and a microloan?

1. Loan amount:

• Credit: Larger amounts, often used for large purchases or investments.
• Microcredit: Amounts are much smaller, usually up to UAH 50,000 (often as low as UAH 10,000).

2. Interest rate:

• Loan: The interest rate is significantly lower (depending on the type of loan and the lending institution).
• Microcredit: The interest rate is much higher (sometimes up to 1-2% per day).

3. Loan term:

• Loan: Long-term - from several months to several years.
• Microcredit: Short-term - from a few days to a few months.

4. Documents required:

• Loan: A credit check, income statement and other supporting documents are required.
• Microcredit: Can be issued without an income statement and credit check (only a passport and identification code are required).

5. Sanctions for delay:

• Loan: There are sanctions, but they are usually regulated by the contract and their amount is fixed.
• Microcredit: Sanctions for delinquency are often much higher and include daily fines, penalties, and the charging of increased interest on the debt.

6. Lenders:

• Loan: Issued by banks or licensed financial institutions.
• Microcredit: Can be provided by both banks and non-bank financial institutions licensed by the National Bank of Ukraine (NBU).

7. Purpose:

• Loan: Often targeted (for housing, car, education, etc.).
• Microcredit: Often untargeted, designed to cover urgent financial needs.
• Microcredits are commonly used to quickly solve financial problems, but due to high interest rates and harsh sanctions, they should be used carefully.