If you go through all the negative reviews about small loans, you will notice that the people who gave them failed on three important things. First, they took the loan out of impulse. Second, they did not spend the money wisely and third, they did not take the time to understand their lender’s terms and conditions. Not having checked these three times would definitely lead to financial distress.
Do Not Apply for Small Loans Out of Impulse
Submitting an online small loan application out of impulse is just like getting on a 10-minute shopping spree. You get things that catch your fancy but at the end of the day you regret your purchase and enter a state called buyer’s remorse.
So when you’re about to click on that “Submit” button, you must be decided on why you need to take a small loan and how you intend to use it once approved. Here is where the old adage applies: “think a thousand times before you decide.”
Do Spend the Loaned Amount Wisely
You need to understand the difference between wants and needs. Wants would be the things that can make you feel better but you can still survive even without them. On the other hand, needs would be the things that ensure your survival. Examples of needs would be food, clothing and shelter.
If you are employed, then you have a source of income to pay for your basic needs. But you might not have the money to finance emergencies. This is where small loans step in. Small loans bridge that brief monetary gap between paydays. They give you the means to handle emergencies without being bound into a long-term contract.
Since small loans are only short-term, it is your responsibility to pay them back on your next payday or at most 30 days from the time that you took the loan. The maximum amount that can be approved as small loans would only range from $1000 to $1500 so you have to use the money wisely.
Do not take two or three small loans from different lenders all at once. If you think that the approved small loan amount in one lender is not enough, learn to prioritize.
Do Understand Your Lender
Various lenders have different terms, guidelines and conditions on the small loans and other related services that they offer. So never assume that since one lender works for you, the other will too.
Understanding your lender means taking the time to know all the interest rates and fees. It also means that you need to get a general picture of how the transaction works before you commit to anything. The FAQ page of the lender’s website should give you the information you need. If in case you need to know more, your preferred lender should have a direct customer service line that you can call.
Small loans are great because they require no credit check. You can take advantage of them even if you have bad credit. However, if you fail to run through the three things noted above, you will end up with a not-so-pleasant experience. Bear in mind that the level of satisfaction you get from small loans is a shared responsibility between you and your lender.