Small personal loans are usually the general-purpose loans which are given to the borrower by any financial institution or bank. As the name signifies, this loan is given to the borrower for covering ‘personal' expenses like expenditures of a hospital, home repair or improvement, stabilizing debt, etc. The expenses which occur during your holidays or for your child's education can also be covered by small personal loans. Nowadays, availing these loans has become very easy and anyone (even people with bad credit history) can get such loans instantly. Here few facts about small personal loans are mentioned which everyone should be aware of.
Unsecured Loans
These loans are unsecured which implies that no asset should be pledged by the borrower as collateral. This motivates people from different financial background and profession to go for these loans. Since the loan amount is small, the lending parties also don't feel any need for collaterals.
Fixed Loan Amount
Small personal loans are of a fixed amount. Lenders give loans for an amount ranging from $100 – $1000. Whether the lender is a private entity or a bank, the amount of small personal loans is usually pre-decided. Some traditional lenders even consider the credit history of the borrower.
Fixed Interest Rates
The interest rates on these small personal loans don't change for loan duration. The interest rates depend upon the credit rating of the borrower and are pre-fixed, similar to the loan amount. So, if the credit rating of the borrower is better, then the interest rate will be lower and if the credit rating is bad, then the interest rate will be higher. If these small personal loans bear a variable interest rate, then the amount to repay will fluctuate with the change in the rate of interest. This will create difficulties in managing payouts.
Fixed Repayment Periods
Small personal loans are scheduled to be paid back over a fixed time interval and the time interval can be anything from days to weeks to months. When the repayment period is higher, the interest payout will be more and when the repayment period is shorter, the interest payout will be less.
Credit Score Is Affected
The details of your loan account are reported to the credit bureaus by the lenders for monitoring credit ratings. In case someone fails to pay the installment, the credit rating gets affected and the chances to get bigger loans in future are reduced. The credit rating also affects the credit card applications.
Conclusion
Besides all these important facts, you should always be aware of the companies who promise instant loan to people with bad credit history. There are some genuine lenders who give small personal loans to people with bad credit history but their number is very less. In Australia, You can get a small personal loans from them without any paperwork and within minutes.
This content has been written by an expert associated with small personal loans, a company known to offer excellent assistance on Small Little Loans.
