Costa Rica: Easy Loans Advertised - at a Price!
By Rod Hughes, Fijatevos.com

You. too, can get a loan up to ¢3 million colones within 24 hours, without co-signer, with delivery to your home, reported the national newspaper La Nacion Saturday.

So say the ads in newspapers, flyers and on lamp posts. But the paper also notes that interest rates range from 48% to 65% for this friendly credit.

Contrast that to the average rate of 23% at a financial institution regulated by the government. And even this is high compared with what is being offered in the United States these days.

But, of course, it takes longer to go through the red tape at an accredited financial institution. (La Nacion researched a number of credit sources for its article and found a bewildering variety of offers and terms.)

Some of the non-establishment companies have comforting but colorful names. like Beto le Presta (roughly translatable as "Bob will lend you.") Adrian Jimenez of that company will get you a loan of from ¢200,000 colones up to 3 million within 24 hours without a co-signer, he says.

To qualify, the applicant must present work documents showing employment for at least three months, must be a Costa Rican and approval is predicated on his credit record in the financial system.

How much? A loan of ¢300,000 colones will cost you ¢17,200 colones monthly repayment for 60 months -- in other words more than a million colones for the ¢300,000 loaned.

Of course, Beto le Presta is taking a chance on the loan without a co-signer over the five years of repayment but, Jimenez told La Nacion, at 4.55% monthly -- a hair short of 55% annually.

The paper also consulted Anderson Gaviria, financial advisor to Creditexpress. He says that his company will loan ¢100,00 to ¢300,000 colones without co-signer. But if the borrower wants more than that, he must have a co-signer of proven financial solvency.

On a ¢300,000 colon loan, the borrower must repay at a rate of ¢23,000 colones over a 25 month term. At the end of the term, he will have paid Creditexpress ¢575,000 for his ¢300,000 loan.

Costly? Yes, but Jimenez says the client will know within 15 minutes if his loan is approved. He will also quote you a rate of 0.18% daily, which sounds reasonable until, figured over a year, you find it's actually 65%.

It's normal with these companies that they take out an insurance policy on the borrower to as to be protected in case he loses his job.

The Mercado de Instacredito is another fast-loan outfit, according to representative Gabriel Garcia -- he will lend you from ¢75,000 up in 24 hours. You have to show your Costa Rican ID, a document showing your have been employed at least six months and a electric or telephone bill showing domicile.

A ¢300,000 loan for 36 months will cost you of ¢16,079 colones per month-a rate of 49% annually. Compared with non-traditional lending firm rates, the red tape at banks begins to seem bearable.