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Loan (Photo credit: Philip Taylor PT)
Every now and then, you may find yourself in a situation where you need to get small loans. These could be loans to get you by until payday, or loans to help you pay off debt so that you can get a better interest rate. Whatever the case is, here are some good options for getting a small loan.
Small Loan Lender
The first place you may want to try is a small lender, like a payday loan company, personal loan company, or even a pawn broker. These shops are setup to service small loans in general, as most of them have limits on how much they will lend – typically less than $1000. These loans are typically short term loans, which must be repaid in 30 days or less. They also typically have fees attached to them, so make sure that you clearly understand the total repayment cost.
[FG] You know how I personally feel about debt, so you should think really carefully when going for a small loan — don’t get in over your head.
The Peer to Peer Solution
Peer to peer lending has become a popular way to get small loans. Peer to peer lending actually allows for loans up to $25,000, but many consumers usually borrow less than $5,000. As such, this can be a great solution if you need more than what a typical small lender can offer.
Peer to peer loans also usually have a longer repayment term (up to 3 years depending on the company) and have lower interest rates and fees as well. That makes them an ideal solution if you need to borrow more, and want more time to repay the loan.
Some Banks Have Small Loans Too!
Finally, some small banks are getting into the small loan business. The FDIC recently had a small-dollar loan pilot program in which participating banks started making small dollar loans of less than $2,500 to qualifying individuals.
The benefit of this program is that individuals could now get small loans from their bank, instead of having to go to an outside company. This offered convenience for the customer, and more revenue options for the bank. The FDIC set terms of the program, which banks have to follow, which also provide consumers a little more protection.
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