No matter how carefully you plan your expenses, some unplanned expenses may pop up every once in a while. For example, your washing machine suddenly dies, your car breaks, or you get a fine for a traffic violation. On the other hand, an incredible offer for the trip you’ve always dreamed of appears at a great deal.
These are situations when some extra cash is necessary or even desirable. However, the balance on your bank account is not promising. But holding your horses because of the fact that you don’t have enough money right now doesn’t mean you have to give up on your plans. That’s why smålån uten sikkerite was designed to help you overcome a crisis or fulfill a wish.
What Are Small Loans?
The term ‘small’ refers to the amount you can borrow, given that small loans generally do not require collateral, even if lenders do not consider you an ideal borrower. These are usually cash amounts up to two or three thousand dollars, although some lenders can lend you up to 5,000 dollars.
Small loans come in handy to cover different emergencies and household expenses, but they’re not suitable for situations when you could use more money, such as debt consolidation or home renovation. That’s when you could find another solution, like pledging collateral to get more money.
When you apply and get approved for a small loan, you get it as a lump sum in your bank account. You can use that money in any way you want, but you must adhere to the lending terms and repay the debt within the agreed period.
What Are the Costs of Small Loans?
As said, these short-term loans amount to less than $5,000. This allows lenders to offer fixed interest rates and shorter repayment terms to borrowers, meaning you can save money on interest over the loan’s lifetime. You still have to pay fees, which may differ from lender to lender.
For starters, you can expect to pay the origination fee and the lender’s cost of processing your application. It can be a fixed cost or a percentage of the borrowed amount. Then, some lenders might charge monthly maintenance fees for sums up to $2,000, as these don’t have an APR (annual percentage rate) interest. Also, some lenders might charge an application fee.
But that’s not everything you should calculate in the overall loan cost. You need to consider early repayment fees in case you get a chance to repay your debt before the end date. Don’t forget penalties for late or missed payments.
Where to Apply for Short-Term Loans
Small loans are suitable for borrowers who need quick cash to improve their finances. But lenders don’t find these financial products profitable, so you might have a hard time finding someone to lend you money for short time. Simply put, lenders have smaller profits on these short-term arrangements, so they give up on them.
Your chances are even less if your credit score is below average. In that case, most traditional lenders will reject your application, so you might want to look for those that specialize in black-listed applicants.
But don’t give up on getting a small loan, whether your credit score is 800 or 500. There are still enough lending options out there. You just have to know where to look and how to choose the best deal since not all are favorable and suitable for your needs. So take your time and search for direct lenders or lending platforms that provide small loans.
Application Procedure
Lenders usually provide a simple application form and straightforward procedure without excess paperwork. And these processes don’t differ much, whether you ask for $1,000 or $10,000. You only need to provide basic information about yourself, employment status, and income.
Of course, you need documentation to prove all the details provided. So get everything ready to speed up the approval. You’ll need an ID, proof of employment, and income (pay stubs or tax return). Lenders might also ask for additional papers, like a bank report or a letter from your employer.
After receiving your application, lenders will want to check your credit score. They need to do that and determine whether you can afford the loan and pay it back without problems. If they think you’ve asked for too much or your credit score is lower than required, they might reject your application or suggest something else.
If they approve your application, lenders will send you loan details to check before signing an arrangement. But you’re not obliged to accept it. If so, you can proceed with providing more details if necessary. Then you get your cash fast, sometimes within an hour. On the other hand, if you reject, you can look for other lenders with more affordable deals.
How to Boost Your Chances of Getting Favorable Loans
Poor credit limits your options, as most financing options come with strict lending terms. For instance, some small loans are available to borrowers with poor credit scores, but tend to have high fees and interest rates of up to 48% annually.
So small loans should be a viable option only when you have an emergency. You can make these arrangements more favorable by adding a co-signer or pledging something valuable against the money you borrow. You might get better lending terms, but you have doubled your responsibility to repay this debt on time.
If the situation isn’t urgent, you can wait to improve your standing and credit score and apply for more favorable loans. For example, you can settle card balances and repay some minor debts. On this link, see the best methods to boost your high score quickly.
Small loans can be your best ally and worst enemy, depending on how you treat them. Failing to repay this debt might hurt your credit score for a long time. But if you use this loan for good and repay it on time, you can get your finances back in order.
