When you have a need for extra cash, you have lots of options. You can go to banks, credit unions and online lenders for small loans. You can further choose between fixed and variable interest rates. But if you have bad credit or no credit history at all, it’s best to choose small loans from a nontraditional lender. Why? Here are some reasons:
1. Fixed interest rate
Online lenders of small loans offer fixed interest rates and fees. This means that there are no unpleasant surprises and if you opt for installment payments, you can correctly appropriate how much to set aside each month. This is directly in opposition to equity lines of credit wherein you start with a really low interest rate that gradually increases as your loan extends.
2. On-time payment is a must
Most small loans carry a fixed repayment period. In most cases, the repayment period could be days before your next payday. Other times, you may pay the small loan back within a month or two. If you opt for monthly installments, you will be assigned equal amounts of payment that will already include the interest rate.
However, if you cannot make the payments on time, then that’s the time that you will be charged with additional fees. Online lenders automatically deduct the amount from your bank account so you have to make sure that there is enough money in there on the due date.
3. Everyone is given the opportunity to prove themselves
Web-accessed small loans require no credit check. Hence, with this type of borrowing opportunity, you definitely can solve your money problems even if you have bad credit or no credit history at all. If you can get your small loans approved, then you will also have an opportunity to prove that you are a good payer. Repeat showcase of good payment records could ultimately pull your credit rating up.
Further, because getting small loans is made easier, you can use it to jumpstart a business. Banks approving loans to start a business are very rare. Good thing small loans are here to help.
4. They help improve your home
If you need money to renovate or remodel your old home, you can also use small loans. Updating your home design is the first step to increasing its value. You don’t have to do major changes because a few additions here and there could do the trick.
If you are not thinking about selling, you can still use the small loans to do some minor home repairs for the comfort of your family.
5. Small loans are subject to the ruling of a state
Contrary to what many believe, small loans are legal in almost all states. This means that if they are recognized by the state, they will be listed as nontraditional financial institutions that can offer immediate help to the residents. In exchange, these lenders follow the guidelines set by the state when it comes to small loans – including the terms and interest rates.