Small Loans for Emergent Expenses
Today, many people in America try to meet their emergency needs through their savings and emergency funds. But what to do if you don’t have a nest egg for a rainy day? Will you be able to survive when urgent bills pop up, disrupting your peaceful life and ruining your financial health? Here, small loans rush to help you cover your bills and stay financially stable.
Who Lends Small Loans
There are three primary small loan lenders: BANKS, ONLINE LENDERS, and CREDIT UNIONS.
If you choose the bank, you should consider that the amount will not be transferred into your account as fast as you need the money. Furthermore, banks may require higher credit scores and income sources before approving your case.
Online lenders provide an option of pre-qualification in order the borrowers can check their eligibility before applying for a loan. This option allows avoiding hard credit checks that may affect the quality of your credit history.
Credit unions are more amiable with the borrowers as they do not require minimum credit scores. However, many credit unions lend only to their members or those who have had a membership in their association for a couple of months.
There Are Several Kinds of Small Loans
You may have a couple of choices while seeking the best small loan. Here are different types of small cash advances available in the USA:
1. Emergency loans. These loans are also called “signature loans” or “unsecured loans” as they don’t require collateral such as houses or cars. They are relatively small amounts ranging between $100 to $1000. Emergency loan lenders require credit history verification and an income source.
2. Title loans. For obtaining a title loan, you have to bring collateral, in other words, to put something up to take the loan. Title loans do not require credit history verification and are approved very quickly. The average title loan is from $100 to $5500.
3. Payday loans. Payday loans are short-term unsecured loans with high-interest rates. These small loans starting from $100 to $2500 do not require collateral and good credit scores. They are approved within a few hours and are lent against the borrower’s next paycheck. Thus the term “payday.”
4. Credit card advances. For these loans, you borrow against your credit card to have cash in your hand. As a result, you make a withdrawal from your credit card. However, the amounts have limits and cost more as they require a transaction fee and higher APR.
5. Pawn loans. Pawn loans are swift and easy to get. They do not require a credit check and a lengthy application process. The amount depends on the value of the mortgage you pawn.
Alternative Choices to Small Loans
Medical bill repayment strategy. Perhaps, you have an urgent medical bill, but you don’t have any savings or do not want to take a small loan. In this case, you can negotiate with the hospital about a repayment strategy and claim for a financial-assistance. Different hospitals have different approaches to assistance programs, so you should contact them to see if you meet the criteria.
Low-interest credit cards. People with good credit history can apply for a low-interest credit card with a 0% APR on procurements for a specific period. You can use this option as a short-term loan and repay it within a particular period. Consider, low-interest credit cards require a hard credit check, and if not paid on time, increase the interest rates.
Student loan restructuring. Students can change their loan repayment plan by choosing an income-driven repayment that limits monthly payments and lowers the payment amount.
HELOC. Home equity line of credit allows the borrowers to obtain money against the equity they have accumulated. HELOC may require the borrowers to strictly follow the rules while taking out funds and paying back the debts.
We have discussed the different types as well as the pros and cons of small loans. Choosing one of the aforementioned options can alleviate your financial difficulties and cover small but essential expenses.
[ Updated on 05-Mar-2021, 02:37 ]