When you find yourself in a “financial pinch” and need to “squeeze through” a few weeks or months in order to “right your financial ship” and get and stay “back on track,” the truth is, it is often impractical or even impossible to get the loan you need fast enough from a traditional lender, such as a local bank. This is especially so if you have bad credit, or if you have no significant credit history at all.
To avoid the piling up of overdraft fees on your checking account, to avoid punishing late fees or various necessary services/utilities, and to ensure you still make your full payments on house, car, and other essentials, it may sometimes be highly beneficial to resort to small personal loans taken out online.
Benefits of Small Personal Loans
First, we should understand what is considered a “small” and a “short term” loan. Generally, anything from $100 to $1,000 could be considered small, while short term would be a repayment period of anywhere from a couple weeks to a few months.
The first benefit of small personal loans is that they are readily available, even to those with less than perfect credit.
The second important benefit is that online personal loans can be taken out quickly. Only basic personal and financial information is asked for on the short, simple online application form, and then, approval is highly likely and often instantaneous. Cash can be deposited in your account by the next business day, or even sooner.
Third, by borrowing a small amount to get you through a “tough spot,” you may be able to avoid bank overdrafts, late payments, and other things that could hurt your credit rating. And repaying your short-term personal loan on time could help your credit score.
Fees and Rates on Small Personal Loans
You will often hear that fees on online, fast-cash personal loans have “annual rates” in the hundreds of percent APR; but this is comparing apples and oranges, and the same annual APR argument could be used on overdraft and various late fees. Short-term personal loans are meant to be repaid quickly, not over the course of a full year. You might see fees from $15 to $30 on $100 borrowed, but the rates go down as the amount borrowed goes up. And, a history of repaying other short-term loans on time can also help you get lower rates with some lenders.
Also, the only two widely available options for fast-cash, online, small, short-term loans are personal loans and payday loans. Small personal loans give you better rates, better terms, and more flexibility than do payday loans. Thus, if you need a small amount of cash fast and can pay it back in weeks or months, small personal loans may be your best option.
In sum, small personal loans answer a real need, have a number of real benefits, and are often the best option available when time is of the essence and/or the borrower’s credit is imperfect.