Financial disaster doesn’t necessarily always arrive with a crash, bang, or a big, humungous bill. Whether it’s a simple household repair or a vet bill, your unexpected emergency may have the potential to be manageable.
But for some people, even a relatively small unexpected expense may be a big hassle.
If your savings fall short of what you need, applying for a small installment loan may be a viable option. They may offer a temporary solution to a minor unexpected emergency bill, repair, or purchase.
When it comes to looking for a solution for your next financial emergency, you may not need a large amount of funds. Today, MoneyKey finds out why. Here’s what you need to know about small installment loans.
What Are Small Installment Loans?
Small installment loans are usually a relatively small amount of money, so you may take care of your urgent yet minor emergency expenses.
Just how small are we talking? Technically, the threshold for what “small” means varies. Individual lenders set their own minimum and maximum lending limits.
That being said, borrowers may generally rely on these installment loans if they need $3,000 or less. Sometimes they may also have the option to apply for loans under $1,000 from some lenders.
How Do Small Installment Loans Work?
While they may offer a relatively small amount of money, they still work like a typical installment loan.[1] This means you’ll receive your funds upfront in one lump sum, and you’ll be expected to repay them, plus fees and/or interest, in multiple payments over a fixed period of time.
The dates and payment amounts will generally be outlined in your loan agreement. Sometimes, these payments may coincide with multiple pay dates, but individual schedules may vary.
If you miss these payments, late fees and other penalties may apply. There may also be a charge for making additional or early payments outside of your scheduled ones.[2]
Not every installment loan direct lender will apply these charges, so it’s a good idea to read your loan agreement carefully. This document generally breaks down the details of each payment, including how interest and/or fees factor into them.
It’s important to note that some lenders, like direct lenders for instance, may offer unique rates, terms, and conditions. Before you consider applying, make sure to do your research. Comparing your options will give you the knowledge you need to make the best decision that is suitable for your circumstance.
Can You Get Them Online?
If you know where to look, you can find a lot of things online. However, you may not have to look very far to find small installment loans online. Borrowing money online is no longer something only the tech savvy do.
As more online direct lenders offer their products and services over the Internet, the easier these installment loans are to find. All you need is some spare time to invest as you compare your options online.
How Do You Apply for Small Installment Loans Online?
It may be simple for some. You can find them just as you would hunt down anything else you want to find over the Internet.
1. Open up a Search Engine
Type in your query (and your location, such as your state of residence, for good measure), and you may find a list of options in a matter of seconds.
2. Compare Your Options
Go through the list of loan products to compare their rates and terms. This is an essential step before you apply for a loan, no matter what kind it is.
Comparing your options may help you understand the typical costs of paying back the loan. Just remember to do your research. Make sure the loans you’re looking into are offered in your state and are suited for your specific needs.
3. Read Reviews
But don’t forget to carry out a secondary search that compares each direct lender’s online reputation in general. Seeing what their customers have to say about their experiences may shed light on some of their products and services.
Start with Financer, Finder, and TrustPilot.[3] These third-party sites host reviews that may give you a sneak peek at your options.
4. Apply Online
Once you have a lender in mind, you just need to fill out an online application and wait to see if you qualify. If you do, a representative may get in touch to confirm your details. If your qualifications meet the lender’s criteria, your application may be approved.
[ctaBox url="/rates-terms/" cta="Need cash for emergency expenses? Click here to apply for online loans up to $3,500◆."]Some Benefits of Getting Small Installment Loans Online
Borrowing money online may come with some useful benefits. Here are four of them below.
1. Convenient Process
The days of going to a bank to speak with an advisor are over. As long as you have Internet, you may apply from the comfort of your home.
You’re no longer on a bank’s clock either. Many online direct lenders accept applications ‘round the clock. If the only time you have to yourself is four a.m., that’s okay!
2. Mobile Friendly
Small installment loans online break down barriers between you and your finances. Cutting-edge technology means you can bring your loan anywhere you take your phone. If your lender has an app, you can easily check-in on your account, review due dates, and confirm payment amounts from the palm of your hand.
3. Efficient Communication
Tech powers fast and convenient online loans, making it possible for your lender to communicate with you throughout the steps in the application process.
If you qualify, you may be notified in a matter of minutes. Once you’re approved, you may receive your funds as soon as the next business day (depending on the lender). This makes them a great option if you’re operating on a tight timeline and you need your funds for an emergency.
4. Simple Access
Generally, it used to be that once you were approved for a loan, you would have to go to your lender’s location to pick up cash or a check. Paying it off worked the same way.
No matter how quickly you were approved, these added steps could slow down the process. And in an emergency, you may not have a second to spare.
By applying for small installment loans online, you may receive your cash as a direct deposit to your bank account as soon as it’s available. Setting up automatic payments from the same account is simple and a great way to avoid late payments.
Financial Literacy
While not a direct benefit of small online installment loans, it’s worth noting that some lenders, such as reputable online direct lenders, follow a responsible lending policy. Part of this includes disclosing all rates, terms, and conditions in clear, concise language.
Another part relies on encouraging borrowers to improve their financial literacy, so you’re better informed. They do this with simple online articles designed to help you set some financial goals or brush up on your financial know-how — just like this one!
Know How Your Information is Handled with a Small Installment Loans Online Lender
All these digital steps hinge on sharing a prized possession of yours over the Internet: your personal information.
Your personal information consists of data points unique to you — things like your name, address, Social Security Number, employment history, income, and banking details.[4] You also may have to undergo a credit check that shares your score and broader report with your lender.
Together, this info tells a lot about who you are as a borrower, and it helps lenders decide if you qualify for installment loans online.
To make sure your personal information stays safe, always double check a small installment loans lender’s privacy policy to see how they intend to collect, store, and share your data.
Remember this piece of advice any time you apply for a loan. It applies to every financial product online, including secure online payday loans, installment loans, or lines of credit.
What if You Have Bad Credit?
Here’s some good news: there are small installment loans for bad credit.
This flips the usual script that you generally follow when apply for money online with a not-so-strong credit score.
Bad credit, as defined in our glossary, tells future lenders you have a track record of late or missed payments. For more insight on common financial terms, check out these definitions here.
Missing payments suggest to some lenders that you may have a hard time paying off a future loan. Bad credit can stand in your way as a result, making it harder to qualify for a variety of personal loans.
Some online direct lenders don’t place the same emphasis on your score when deciding to approve your application. They may still check your score, but they might also consider some other financial data points to see if you can afford your payments, such as your income.
Some small installment loans for bad credit may have higher fees and finance charges than other loan options.
What Are They for?
Applying for small installment loans for bad credit makes sense in specific circumstances. It’s best to keep them in reserve until you have no other option.
They’re designed to help cover unexpected emergency expenses if you don’t have enough savings to pay for them on your own.
While a vacation or big-ticket splurge item does not fit this bill, unforeseen healthcare costs, and urgent repairs to your home or car might.
Small Installment Loans May Bridge the Gap
If disaster strikes, the first and best option is always reaching out into your savings. They are generally the best defense against unexpected emergencies.
But let’s face it — it may not always be possible to commit to saving regularly if you live paycheck to paycheck. Even if you do manage to squirrel away some money each month, these funds may fall short of what you need when the time comes to cash-in.
If you’re just shy of paying for unexpected emergency expenses on your own, small installment loans may be the right choice. They might give your financial situation the temporary boost it needs, so you can cover important emergencies or repairs.
If you have strong credit, you may find it easy to be approved for a variety of loan options. But don’t worry if you have less-than-stellar credit. Get in touch to learn how to qualify for small installment loans for bad credit.
[1] https://www.investopedia.com/articles/personal-finance/072316/how-installment-loans-work.asp
[2] https://www.creditkarma.com/advice/i/what-is-prepayment-penalty/
