Definition Personal loans
Loans aimed at personal expenses such as education, health, travel, or emergencies. In Colombia they can be managed 100% online with digital verification.
Glossary of Microloans in Colombia: Quick money, online loans, and fintech
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Glossary of Microloans in Colombia
Clear, practical definitions of the most common loan terms, focused on Colombia’s digital credit sector.
1) Basic terms
Definition Quick loans
Evaluation and disbursement within hours. Used for immediate liquidity with short terms.
Definition Online loans
Fully digital application, validation, and contract signature, without office visits.
Definition Digital credit
Loans granted by fintech using risk algorithms and automated analysis.
Definition Microloans
Small amounts to cover urgent needs or boost microenterprises. Encourage inclusion when managed responsibly.
Marketing Quick money
Commercial message for same-day disbursements. In Colombia, it signals agile processes and fast response.
Definition Instant credit
Automated approval after validating age, income, and account ownership.
Synonym Instant loans
Equivalent to instant credit; designed for urgent short-term needs.
Experience No-paperwork loans
Minimal documentation, no lines; replaced by digital flows with online validation.
Commercial Easy credit
Simple access with clear requirements. Must come from regulated entities to ensure safety.
2) Costs, rates and terms
Risk Credit score
Score based on payment history reported to credit bureaus. Higher score = better loan conditions.
Rule Debt capacity
Practical rule: keep debt ≤ 30% of monthly income.
Payment Fixed installment
Stable periodic payment including principal and interest.
Time Term
Total loan duration. In fintech ranges from days to 24 months.
Cost Effective Annual Rate (EAR)
Annualized cost of the loan. Compare offers with this metric.
Legal Usury rate
Legal maximum rate in Colombia. Formal entities must stay below it.
Fee Study fees
Costs for credit analysis and document verification.
Protection Associated insurance
Life or unemployment coverage linked to the loan. May be included in installments.
| Concept | Implication | Best practice |
|---|---|---|
| EAR | Annual cost of the loan | Compare offers equally |
| Fixed installment | Stable periodic payment | Align with income flow |
| Debt capacity | Healthy borrowing limit | Stay ≤30% of income |
| Prepayment | Early repayment | Use to reduce future interest |
3) Digital process (fintech)
Flow Disbursement
Transfer of approved funds to the applicant’s account, often same-day.
Flexibility Prepayment
Reduces interest by shortening the loan term; usually penalty-free in fintech.
Risk Default
Failure to pay on time. Leads to penalties and negative reports that lower credit score.
Skill Financial education
Ability to compare offers, read EAR, understand terms, and project cash flow.
4) Responsible borrowing
- Don’t exceed 30% of income in debt service.
- Compare EAR, fees, and insurance before signing.
- Prefer shorter terms when possible.
- Avoid multiple loans at once.
- Use prepayment to save on interest.
5) Frequently Asked Questions
What documents are usually required?
ID, proof of income, bank statement, sometimes employment certificate.
How long does disbursement take?
In agile fintech, from minutes to the same business day after validation.
How does default affect me?
Generates late fees and negative bureau reports, lowering future credit access.
How can I improve my score?
Pay on time, lower balances, and keep low credit utilization.
What should I compare across offers?
EAR, fees, term, total repayment, prepayment policies, customer service.