How to Compare Small Personal Loans?
When you have a strong budget in place you would have accommodated all your planned expenses in it. There might also be an emergency fund set aside for emergencies and a small fund to meet unplanned expenses. But even with such meticulous planning, there might be cases where your spare funds do not suffice and where you are not in a situation to tap your emergency funds. So if you do understand the implication of each loan on your credit performance then applying for a small personal loan would be a good option. Small personal loans can be of many types and there are many financial institutions that today offer small personal loans. Given the variety that appears overwhelming and the fact that the range of the rate of interest is a vast one, how do you make sure that you choose a small personal loan that would actually solve your purpose? This is one of the sources that can throw some light on this matter https://www.lainaa-heti.fi/laina-50/
What is a small personal loan?
If you are in need of cash and if you need it immediately, then a small personal loan can be of great help. This is very much similar in its structure to any normal personal loan. But the difference here is in the lowest amount being granted. There are also differences in the rates of interest. And not all personal loan providers might have the option for small personal loans.
Small personal loans might be unsecured loans in most cases. So there is no security being asked for and this, in turn, would make the loan a risky one and therefore the higher rates of interest.
What are the factors that determine eligibility for small personal loans?
Though there are many factors that affect the eligibility the common ones are the employment records and the income amount. The loan amount granted might depend on the income levels. Credit unions and banks might check the credit score while other types of loans might even approve low credit cases.
Here are some factors to check in order to wisely compare the various small personal loan options –
Check whether the chosen loan has any hidden charges to worry about. People check the interest rates but often overlook the other charges levied for the loan. There might be origination fees and processing charges which then add up to the total expense. But when you are applying for a very small loan all these added expenses might make the loan a huge burden to repay.
Besides the actual rate of interest the method of charging the interest rate also varies. There are some types of loans that come with a fixed interest rate and some with variable or floating interest. In case of variable interest rates check whether there is a range or limit predefined. Fixed interest rates are convenient as you would know the exact amount to pay in the future.
Secured vs unsecured loans
Small personal loans could be secured loans or unsecured loans. The choice is based on the type of security you have in order to obtain the loan. If you do not have an asset to use as a security then an unsecured loan might be your only option.
The small personal loans with flexible repayment options are the best ones to choose. Some have very strict schedules for the repayments. Even when you have surplus cash at hand you might not be able to pay back several installments together in the case of a few such loans. Look for the ones with flexibility in the repayment tenure as well as the option to close the loan in advance. Also when you pay a bulk amount in place of installments there are differences in the place where this amount is adjusted. Some of the loans reduce the amount in the principal and thus you would be able to reduce either the monthly interest paid or the tenure of the loan itself.
No matter how costly the loan is trying your best to repay the installments on time. Avoid situations where you might get into heavy debts. One other factor that is not spoken about too often is the type of debt collection process followed by the lending institution. Stay away from those that are not too reliable.