SMSLoans: How They Work in the Real World


The short-term quick loans like the payday loans are also referred to as SMS loans. These are small, quick to get and very little or no paperwork involved. One need not go through the rigorous process of being evaluated for the eligibility to avail a loan. These loans are given to just about anyone and everyone. Whether you have a great credit score or a bad credit score, you can get this type of loan in no time.

So How Do They Really Work?

It sounds too good to be true, doesn’t it? Someone is ready to lend you money almost immediately and does not bother about your credit history, your income, your other debts etc. it is just so simple, right?

No, on the contrary, these loans are sometimes more of a burden than the long-term loans. Though you can get these SMS loans in no time, the interest rates charged are extremely high. This is legal and understandable because the lender needs to save themselves from bad loans. If one does not return the money, the lender does not even have collateral to use and get back the lost money. In order to protect themselves from this loss, they charge a very high-interest rate.

In the case of long-term loans, you are put through the grueling task of being assessed and questioned on various levels before the loan is approved. This is done by the lender to ensure he is not at risk or to minimize his risk. On the other hand, in an SMS loan, the risk is high and the lender makes you compensate for the risk undertaken by them.


Though the amount is less and given on a very short notice, the repayment is not that simple. The interest rates are high and the repayment period is very small. There is no interest rate cap like in long-term loans, to protect the borrower from unusually high-interest rates. You can compare and contrast many such loans on

As a result, many seem to take out another loan to pay for these SMS loans. Before they realize they are buried in debts and the amount they have repaid would be much more than what they borrowed, with much more left to pay off.

Unless you are very sure of the loan and some money coming in, in the near future, an SMS loan would be a very risky affair.