Small Personal Loans
It is always advisable to have a contingency fund to deal with emergencies. It is always not as easy as it sounds. If you are unable to save enough to deal with unexpected circumstances, you will need to borrow when an emergency strikes. That is when small personal loans come in. Small personal loans are a quick source of funding to help you settle unexpected medical bills, car repairs, and other bills.
How Do Small Personal Loans Work?
The process of applying for a small personal loan is similar to that of regular loans. Most of them are online. All you need to do is to complete the form online and then the lender will get back to you. When you are approved for the loan, the lender will ask you to sign a loan contract. This contract can be signed online. The lender will deposit the cash into your account by the next business day.
Although lenders have different loan requirements, there are some requirements that run through. They include the following.
- You should be at least 18 years old.
- You should also have an active bank account.
- You should be a citizen of the United States.
- You should have a steady source of income.
Benefits of Personal Loans
Simple application process
You can apply for the loan from the comfort of your home. Once you have a computer and a stable source of internet, you can apply for the loan. The forms are not as loaded as the ones you complete when you are applying for traditional loans. You can complete the forms in less than 10 minutes.
You can get the cash in your account as soon as the next business day. This means that if they need the cash urgently, you will receive it on time to sort out your issues.
If you do not have collateral, you can still get an unsecured loan. With unsecured loans, you do not risk losing your property.
Things to Do Before Applying for a Small Personal Loan
Although it is easy to get a small personal loan, it must be taken with caution. You should consider the following things before applying for this loan.
Ability to repay the loan
Make sure that you can pay the loan. You should check if you can spare enough funds to repay the loan. In some cases, you may have a steady source of income but you have allocated your salary for certain expenses such that there is none to spare. If that is your case, do not go in for a personal loan unless you are ready to adjust your monthly expenditure to get enough to pay the loan.
Check if you really need the loan
There are other funding alternatives when you need a loan. Some of them may even be cheaper. Borrowing money from your family and friends is cheaper since there are no loan processing fees. In most cases, you do not even need to pay interest rates on the money you borrow. Check if you can get funds from other cheaper alternatives first. You can also check if you have enough savings to cover the money you need. If you have exhausted all these options, you can go ahead and apply for a small personal loan.
Purpose of the loan
Sometimes people apply for small personal loans simply because they qualify for it. This should not be you. You should have a clearly defined reason for applying for the loan. Some lenders do not ask for the purpose of the loan but that does not mean that you should not have a well- defined reason for getting the loan. Make sure that you do not make expenses you cannot account for when you get the loan.
Where to Find Small Personal Loans
You can access personal loans from several other institutions apart from online lenders. They include the following.
Credit unions are formed for people who are affiliated to one institution or group. It could be where you work, live, or worship. If you are part of a credit union, you can get access to a small personal loan. Most credit unions offer loans to people who have savings accounts with the union. They require that you should have a credit score and history.
Some major banks
Major banks offer a wide range of loans. These banks, however, have minimum loan amounts they offer. Some of them are as high as $5,000. Fortunately, there are banks that offer low amount personal loans. They allow people to borrow as low as $1,000. You can consider these banks when you apply for a small personal loan.
You can also pawn your items to get a loan to sort out your financial issues.
The good thing about small personal loans is that the lender will inform you all about the interest rate you will pay on the loan. You will also be informed about the fees that come with the loan. You will know the exact amount you will be paying at the end of the loan period. The lender will also help you to choose a repayment method that will be convenient for you.
When you apply for a personal loan, remember to read the lender’s terms and conditions before you sign the loan contract. Reading the terms and conditions will help you to understand the terms of the loan. You should also check your credit score before applying for the loan. Remember not to apply for several loans. Even if you need to shop for rates, do that within a short period.
When you shop for rates, some lenders perform hard inquiries when you apply for loans. These inquiries affect your credit score negatively. If you apply for several loans around the same time, the inquiries will be counted as one. You can also ask lenders to perform soft inquiries since they do not affect your score.