A survey says that one of every five American takes advantage of online small loans. However, creditors are still expecting an increase of users following the rise of the cost of living in the US. Rent is expected to increase as well as the prices of gas, food and electricity. The sad thing is there isn’t any news of wage augments.
So if you are a member of the employed population who are in the need of immediate cash, here are some critical points that you need to understand before getting small loan companies to help you out.
1. Are there hidden charges in that small loan you are planning to apply for?
In a related study, it appears that about 45% of those who took small loans were hit by unexpected charges. This is what happens if you do not read the fine print. These unexpected fees could be the consequence of late payments and/or overdraft fees. So to avoid these unwelcomed surprises, take the time to know all about the fees and interest rate that will and might apply. You also need to understand the scenarios that would lead to their application.
By law, all state-licensed lenders are required to educate their borrowers on all charges prior to entering into a small loan contract. But since the entire transaction happens online, what lenders do is that they include a list of all fees and charges into the contract that needs to be signed by the borrower.
Other websites have a part of the application process wherein they will need to read the entire contract then hit “I Agree” before proceeding to the next step(s) of the application for a small loan.
2. Are there enough health warnings all over the small loan website?
Borrowers need to be constantly reminded of their responsibilities when they decide to apply for small loans. However, these warnings should not come in the form of unsolicited phone calls, text messages and/or emails. Rather, these warnings should come in subtle forms and must be seen all over the website.
One example of a small loan fact that needs to be pointed out is that additional charges could apply if the small loans are not paid back on time or if rollovers are requested.
3. Are there free financial educational services offered?
Upon the submission of your application form and requirements, your lender must then do a mandatory affordability assessment in order to determine the probability of you paying back the small loan on time. If your income level and expenditure are just enough to afford small loan payments, then your application will be approved. Otherwise, it will be denied.
But if the application for small loans was approved and you later on find yourself unable to make the agreed payments, then your lender must have the ability to give you basic financial education before moving forward with suggestions.
You will learn to appreciate the importance of small loans if you understand these three critical points.