Why Go For a Small Personal Loan for Sudden Expenses
Are you in need of some extra cash? Getting a personal loan may be the ideal solution for you if you suddenly need some money. Although it may be challenging to find one, it would cost you less in the long run compared to other alternatives.
Various events may suddenly require some money, such as an unexpected visit to the vet for a sick pet, a busted pipe at home, or your car needing a sudden repair. While these events may not require a large amount, they may cost more than the money you have on hand.
According to a Federal Reserve report in 2018, 40% of adults say they do not have enough money to cover a cost for an unforeseen expense of $400. They may need to sell items or borrow money to cover this expense.
You may be considering credit card loans, payday loans, or personal loans. However, it is a common assumption that personal loans are only for significant expenses.
This article will run you through everything you need to know about personal loans and how they can come in handy for smaller purchases and expenses.
What Is a Personal Loan?
In general, a small personal loan can refer to borrowing sums of $3,000 or less. Some lenders may set minimum borrowing limits of $3,000 to $5,000, depending on where you are applying for the loan. However, there are also lenders offering loans for $1,000 or less.
The annual percentage rate (APR), loan terms, and monthly payments can vary on factors such as your credit score, credit usage, the lender, and the loan terms. It is best to compare several loan lenders before deciding which one to apply for.
How Do You Apply for One?
Applying for a small personal loan is as easy as applying for a regular personal loan. The specific requirements will depend on the lender, but usually, they request proof of income, a credit check, and your bank account information.
If you are a credit union member, it may be easier for you to apply for a small personal loan. They may even offer payday loan alternatives. Banks usually offer personal loans and may be less willing to provide small personal loans. Some lenders offer personal loans online for a more convenient experience.
You may also want to check whether they charge prepayment penalties for paying off your loan earlier.
What Are Your Other Alternatives?
For small loans, it may be tempting to just go for payday loans and credit cards, thinking it would be easy to pay off. However, these loans usually come with higher APRs and fees. The Consumer Financial Bureau says that a two-week payday loan may have an APR as high as 400%.
This higher cost can put you at risk of taking out new loans just to pay off the original loan. Similarly, it may be hard to get out of credit card debt even if you have a 0% initial APR.
Conclusion
A small personal loan can be an excellent alternative to payday loans and credit card payments. It offers similar benefits without the hefty fees and the risk of being caught in a cycle of debt.
Are you looking for loan companies in Opelika, AL? Opelika Finance understands the time-sensitive need for help when you are short on funds. Apply for a loan today!