Small loans have become increasingly unpopular with bankers and other traditional lenders. The costs that lenders must pay for underwriting, processing applications and handling payments are not significantly more for high-dollar loans than for small-dollar loans. Therefore, many traditional lenders prefer to focus on high-dollar loans that will reward them with greater profits. Conversely, many small-dollar loan companies have stepped in to provide the type of small-dollar loans that a great many consumers prefer.
Small Loans Can Make a Big Difference
Small loans can make a big difference in the lives of cash-strapped consumers. Many Americans are living “paycheck to paycheck,” finding that their income barely stretches to cover normal expenses. When faced with an unexpected bill of even $200, it can be difficult for them to absorb the expense without incurring a late fee on their rent or utility bill.
Whether the additional fees are for late payments or for checks returned by the bank due to insufficient funds, the extra costs can snowball. Added to the original shortfall, these extra fees can play havoc with the budget and turn a relatively minor “cash crunch” into a much larger problem.
Applying for Small Loans Online Is the Solution Chosen by Many Consumers
Many consumers choose to request small loans online to solve their temporary cash challenges. It takes little time to complete a form online; with some lenders, the entire process can be completed in as few as three minutes. The decision process is also fast; many lenders respond just a few minutes after receiving an application.
No one wants to be in debt for more money than they need or for an extended period of time. With small-dollar loans, you can borrow as little as $100 with a due date as soon as 14 days. However, for those needing larger amounts or longer payment terms, there are lenders who can accommodate their needs.
Because you can apply by accessing the internet from your home computer, you can submit your form when it is convenient for you. It does not matter whether it is the middle of the night, a weekend, early afternoon or a holiday — you can still get started requesting small loans online.
If a lender approves your application, the funds can be deposited in your bank account electronically; you will typically not need to wait for a check to arrive or make a special trip to cash it or deposit it.
Small Loans for Bad Credit Are Available from Many Lenders
Small loans for bad credit have become increasingly difficult to obtain from traditional lenders. Banks frequently will not approve loans for borrowers with damaged credit or borrowers who have not established a credit history. Since they also are typically not interested in making small-dollar loans, borrowers with bad credit who need these loans have two obstacles to overcome with traditional lenders.
Fortunately, online lenders who offer small loans for bad credit do not share the philosophy embraced by many traditional lenders. Most lenders allowing you to apply for small loans online will accept your application even if your credit is blemished or nonexistent. Incidentally, even those with great credit can apply for small loans for bad credit.
Since online lenders have made it so easy to apply for small-dollar loans, why wait? You can get started now so that you will receive a decision that much sooner.
What You Need to Know About Small Loans
Whether they are small loans for bad credit or small loans for excellent credit, online loans are typically considered unsecured personal loans. This means that you do not need to have collateral to guarantee the loan.
Small loans can be installment loans or payday loans. Payday loans typically start at $100, but some lenders have different minimum loan amounts. Installment loans are often for larger amounts, but again, the minimum loan amount can vary by lender.
Payday loans often require repayment within 30 days, but some lenders may require repayment within 14 days. Repayment terms for installment loans depend on the size of the loan as well as the lender’s policies. Some installment loans can be repaid over three, six or even 12 months. For payday loans, the payment required is the amount of the principal plus any fees or interest, but installment loans allow you to repay a set amount at specified intervals until the entire loan is repaid.
Being a Responsible Borrower
From small payday loans to home mortgages, access to credit is an integral part of modern life. Therefore, you want to be a responsible borrower to protect your credit rating and eliminate unnecessary stress caused by unpaid loans. The following tips can help you ensure that you use credit products wisely.
• Even when applying for small loans, people need to have a realistic plan for repayment. Know how payments will impact your budget. Will you be able to meet your housing costs and other expenses during the repayment term? If not, it might not be in your best interests to take on more debt right now.
• Borrow only the amount that you need. It might be tempting to take out a loan for twice as much as you need, but remember that you will be repaying twice as much as well.
• Borrow only when you must. If you can postpone a purchase and save up to pay cash for the item, you can save the interest and fees associated with a loan. In addition, many people feel a great sense of pride when they make a purchase without incurring a debt to do so.
• If you are approved for a loan, be sure to keep the lines of communication open with your lender. If you run into a problem making your payments, contact your lender promptly; most lenders will be happy to work with you. If you move, change your phone number or go to work for another employer, let your lender know.
• Consider small loans as temporary solutions rather than long-term, permanent fixes. Look for ways to build a savings account that you can fall back on when faced with an unexpected expense. For example, you might be able to take your lunch to work instead of eating out, putting the money you saved into a separate account earmarked for emergencies. You might be able to sell things you no longer need or want at a garage sale or online, depositing the proceeds into your savings account.
If you borrow responsibly, small loans can offer you a way to deal with a temporary cash shortage. Whether you need to have your car repaired or want to spend a weekend relaxing at the lake, a small-dollar loan may be a viable solution. You are already here, so why not go ahead and get started now?