Marjorie wants to take out a small loan online and she wants to know if she should. Here’s Marjorie’s story:
My family transferred to a new community a year ago and immediately felt at home when we joined a local church group. Everyone was accommodating and hospitable and very soon we were invited to join monthly dinners that community members took turns hosting. We enjoyed the dinners so much and the hosts really took pains to put the best food on the table. We knew that one day everyone will be expecting us to take our turn hosting the event and I’m really worried. I’ve been making small mental note in my head of how much it would cost to host a dinner for 30-40 people. If I took out one of these small loans online, I know I can cover the costs and host a dinner that will impress our new friends. Is this the solution to my problems?
– Marjorie
Do you really want to be in debt, Marjorie, just to impress your friends? Perhaps you should wait for a more serious emergency? Small loans online can be terribly expensive compare to other loan types and should be resorted to only for extreme situations. Read on for more information on this very controversial financial instrument.
What’s the nature of small loans online?
A small loan online–in the UK and Canada these are popular–is an easy short-term personal loan or cash advance that usually requires no collateral. It is often released to the borrower instantly after minimum requirements of the direct lender have been complied with. The borrower is obliged to repay the loan when the next salary comes along. Usually the small loan online is paid by issuing a post-dated check, or through a debit or credit card.
How to apply? The basic requirement is proof of employment or steady source of income. As to where, you can apply for small loans online on the Internet or through a broker’s brick and mortar office. Most creditors of small loans operate online and have online mechanisms that will help facilitate the fast approval of your instant loan. They have also greatly simplified the application process so that it is possible to complete your application within minutes and get the amount credited to your account within the day. The lender will charge a processing fee which is deducted from the loan principal in addition to the interest rate of the small loans online.
If the application is made with a broker, a fee corresponding to the broker’s services rendered in processing your application will be charged.
Who is qualified for small loans online?
Anyone who can provide proof of employment or a steady source of income can apply for small loans online. Residents and citizens of the United States that have a social security number and are not less than 18 years of age have good chances of securing small loans online approval. Your latest pay slips or a bank statement reflecting your regular inflows of earnings are the usual documents required.
Documentation requirements may vary from lender to lender (you can find more in this prnewswire.com article). The interest charges, fees and terms of direct lenders as well as the maximum amount may also vary but lenders usually want to stay competitive so there won’t be too much variation in this area. What you can focus on, though, are the other terms and conditions that come with the loan. This is where most of the complaints are coming from, and definitely the aspect you should watch out for. People with bad credit scores are the usual market for this type of loans. If you’re one of them, make sure you’re not digging yourself into a deeper hole.
The last word on small loans online
Of course, those that resort to instant loans online do so during emergencies and will need to get the loan amount quickly. Today, not yesterday. Now, not later. Marjorie’s case doesn’t quite qualify.
To get a better idea of the issues surrounding small loans online, visit the article archive of the New York Times. They have a special section dedicated to these types of loans. If you want to check out what complaints from other consumers before you make a decision, check out the Consumer Financial Protection Bureau website.
Why is FinancesOnline free?
Good for you, but did it occur to you to use a card instead? Unless of course you’ve maxed out or defaulted in the past, which suggests why you’re into small loans. Not to disparage, but I just want to put your idea in context. Taking out payday loans or online loans (whatever they’re called) is already an indicator that you’re in a financial bad shape. If you’re using these loans just to buy deals, that’s not going to help you get back to your credit footing. Maybe it’s time to reconsider your buying behavior and start using loans for emergencies only.
I admit using small loans to buy some limited deals that can’t wait for my next paycheck. I’m single and have a manageable lifestyle so this loan works for me. I know I’m giving up a couple of bucks maybe to pay for the interest, but in general, I still end up paying less for the deal than buying it on regular price. What’s nice about small loans (up to $200) is that it’s easy to pay them back if you have a regular income. But I won’t recommend that you depend on small loans for your basic needs. That’s kind of scraping the bottom.
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