If you have never
heard of a small personal loan, you may be wondering what it is and how it can
help you. Though some small loans are interchangeable with payday loans, where
you are given money at a very high interest to use until you are next paid,
there are others that are more useful. Small personal loans are basically any
unsecured loan that is for $10,000 or less which is often used in lieu of
credit cards.
Who Can Receive a
Small Personal Loan
One problem with small
personal loans is that often they can be difficult to obtain if you have bad
credit. Many lenders will insist on collateral for the loan, making you place
your car or home in jeopardy should you be unable to pay the loan. Small
personal loans are really a better option for those with better credit scores
who can obtain these funds at an interest rate much lower than many credit card
companies.
The Uses for Small
Personal Loans
If you are one of
those people with good enough credit to qualify for an unsecured loan, the next
step is to determine what use it would have to you. Unlike home or auto loans
which must be used for specific purchases, personal loans can literally be used
for anything.
Some ideas for the use
of an unsecured personal loan are:
A means to consolidate
debt (often credit card debt) into one payment with lower interest rates.
Many small personal
loans will have interest rates as low as 5.9% which is much better than even
the lowest credit cards. Using this kind of loan to consolidate debt in this
way can literally save you hundreds in interest.
A way to make a large
purchase, such as home furnishings, with a longer term payment plan and a lower
interest than offered by stores.
Other home improvement
projects can also be costly, such as furnace replacements or upgrade to
windows, the roof, etc. Basically, you can use small personal loans as
alternatives to a home equity loan if you cannot get one. An unsecured small
loan can provide a great way to get improvements done quickly with the lowest
interest rate around.
A method for paying
unexpected expenses over time that provides a better interest rate than credit
cards.
Emergencies happen,
and there is really no way to fully prepare for them. That's why they are
called emergencies. If you have already had any number of these situations
happened, consolidating your payments for them into small personal loans can go
a long way in making the pay back process easier.
A safety net that you
can use for "emergency" funds such as unexpected medical bills, car
repair, etc.
On the flip side, you
also want to be prepared for these events in the future, and using a loan to
build a safety net allows you the reassurance of knowing that you have already
made the plan to pay the loan back, rather than worrying about doing so in the
midst of a crisis.
No comments:
Post a Comment