Many people in this era need access to small-dollar personal loans rather than large-figure sums. They might need to pay for unexpected car repairs, or sky-rocketing medical bills, and probably do not have the cash set aside in advance of their emergency need. Small-dollar loans are designed to provide lower-income individuals and families with necessary funds on affordable repayment terms. They can be an ideal option for building or rebuilding credit, and can even help establish a foundation for other asset-building loans, like auto loans or mortgages. Because small-dollar loans (also known as small-figure loans) deal in small increments of money, they also tend to be short-term with quick repayment schedules.
Unlike a home or auto loan, small-dollar loans generally do not require collateral. Your interest rate will often be based on your creditworthiness. Your credit score and income history may be the primary factors a lender will choose to look at, but by no means are these items the be-all and end-all of the loan application process. A lender may choose to offer a small-dollar loan to a person with less-than-perfect credit; they interest rate attached to loan may be higher than it would for an applicant with a good or great credit rating, but it is often still affordable.
There are several different types of lenders that offer small-dollar loans.
There may be nothing easier than going to a payday loan business, because they do not check credit scores to make their decision. However, payday lenders should be a last resort for many people looking for a small-dollar or short-term loan, as they often charge exorbitant amounts of interest; interest rates have been reported as reaching 1,000% of the principal, or higher. They offer short-term cash advances in exchange for access to the borrower’s deposit account via post-dated check or electronic transfer authorization, and often require a lump-sum repayment, rather than installments. Often, a borrower who takes out a payday loan has trouble finding the funds to pay back the loan in-full and on-time, and may get trapped in a cycle of debt for weeks, months, or even years.
The National Consumer Law Center says that loans of less than $2,500 are only considered to be affordable if:
· The attached interest rate is less than 36%
· The terms of repayment offer three months amortization
· The loan includes no balloon payments
If you are in need of some hard cash fast, contact Wise Loan for affordable small-dollar loans today!
We are not financial advisors and therefor are not giving any financial advise. Before implementing any of the tips on this website, please consult with a financial planner to ensure it makes sense for your individual financial situation.