There are plenty of reasons why you might need a personal loan — you might want to consolidate credit card debt or cover an unexpected bill or fine. A small personal loan can help you avoid interest charges and save more money by covering urgent bills fast. It’s never been easier to get a small personal loan online with the spread of online banks and lending services.
We’ll take a look at how you can get a small personal loan quickly and safely online and show you exactly how you can use your personal loan. Finally, we’ll show you how you can get up to $250 fast with an Instacash advance or a 5.99% APR Credit Builder Plus loan from MoneyLion.
What is a Small Personal Loan?
About 27 million people in America have at least one personal loan, according to data from credit reporting bureau TransUnion. Personal loans were one of the fastest-growing financial products available in 2016. But what exactly is a personal loan — and why are they so popular with consumers?
A personal loan is an unsecured debt that you pay back over time with interest. An unsecured loan means that no collateral backs the loan. The opposite of an unsecured loan is a secured loan. In other words, the lender can reclaim a piece of property you own if you default on what you owe with a secured loan.
Mortgages and auto loans are examples of secured loans. Your lender can claim your home or car if you don’t pay your bills, for example. Personal loans and student loans are examples of unsecured debt — your bank can’t take away your college degree if you don’t pay. Unsecured loans usually have higher interest rates than secured loans because there’s more risk for your lender.
How do you get a small personal loan?
First, visit your bank or online lender and request a loan application. Most lenders consider any amount below $3,000 to be a small personal loan. Personal loans aren’t like credit cards — you cannot “refill” your loan amount once you pay it off. Know how much money you need when you apply for the loan. Some lenders have minimums for the amount of money they’ll lend. Ask about minimum personal loan amounts when you apply for your loan.
A lender will look over your application and decide whether you qualify for a loan. The lender might look at your income, credit report and current debt before it decides to offer you a loan. Every lender has its own individual standards for qualifying for a loan. If you have bad credit or no credit, you may want to look for a lender that specializes in no credit check loans like MoneyLion.
Your lender will give you some paperwork that explains the terms of your loan when you get loan approval. It will explain your loan’s “term” (the amount of time you have to pay back your loan) and your monthly payment (the amount you have to pay the lender every month). Every monthly loan payment includes two parts: principal and interest.
The principal is the amount of money you originally borrowed in the loan. For example, if you borrow $1,000, your loan has a principal balance of $1,000. You also must pay interest on the amount you borrow every month.
Most banks and lenders calculate interest in terms of an annual percentage rate (APR). APR is the percentage of interest that you pay on your loan every year. For example, if you borrow $1,000 with an APR of 10%, it means that you’ll pay $100 every year in interest, or about $8.33 a month. Choosing a loan with a lower interest rate can save you money over time.
Your monthly loan payment stays the same every month, and you make payments directly to your lender.
Personal loans are popular because you can use them for almost anything. Unlike a student loan or a mortgage, you don’t have to use your loan for a specific purpose. Here are some of the most common reasons why people take out personal loans.
Cover a Home Repair Bill
Is your water heater on the fritz? Did your deep freezer suddenly call it quits? A small personal loan can help you cover a debt fast to get the replacement home appliances or repairs that you need.
Pay Back Family or Friends
Some people who borrow money from a family member or friend use personal loans to pay back what they owe.
Funding Veterinary Bills
You undoubtedly love your furry friend — but being a pet owner can quickly get expensive. A personal loan can get you the cash you need fast, whether your pet needs emergency treatment, medication or surgery.
Buying Textbooks or Other Back-to-School Supplies
According to data from The College Board, the average college student spends a little over $500 a semester on textbooks. Textbooks, lab manuals or other supplies for school can be covered using a small personal loan.
What to Look for in an Online Small Personal Loan
Have you decided that a personal loan is right for you? The lender you choose is just as important as the amount of money you take out. Here are a few features to look for when you compare banks and lenders.
Some banks have minimum amounts that they’ll loan out. But don’t take out the maximum amount allowed if you don’t need it. In other words, if you only need $250, you might not need to take out $500. Instead, look for a lender with lower minimums that fit the amount of money you need.
Low or No Fees
Paying excessive fees on top of the amount of money you’re borrowing as well as interest may not be the best idea. Look for a loan provider that offers low to service your loan.
A Low APR
A higher APR can cause you to pay more for your loan over time. Let’s look at an example
Let’s say that you need to borrow $1,000 and you have a choice between two lenders. Lender A will give you $1,000 and allow you to pay it back over the course of 24 months at 5% APR. Lender B offers you the same terms, but with a 7% APR. You’ll pay $43.87 each month if you choose Lender A. By the end of the loan, you’ll pay the lender a total of $53 in interest.
You’ll pay $44.77 each month with Lender B. That might not sound like a ton of money, but by the end of your loan, you’ll pay the lender $75 in interest for the same original loan amount.
Some small personal loan providers like MoneyLion even offer 0% APR and 5.99% APR. Don’t be afraid to shop around for a loan before you make a commitment and make sure you understand your APR before you sign on any loan.
No Impact on Your Credit
Some banks require that you undergo a background check before you get a loan. Lenders use “hard checks” on your credit to view your credit report and credit scores. These hard checks can temporarily lower your credit score, which can be frustrating if you’re trying to build your credit. Look for a lender like MoneyLion that offers personal loans without a hard check requirement.
Get a Small Personal Loan with Instacash from MoneyLion
Instacash from MoneyLion allows you to instantly get up to $250 in your account with no fees and 0% APR. You won’t need to worry about credit checks, long waiting periods or high minimums when you choose MoneyLion. You’ll pay back your advance when you get your next check. Simple, stress-free and easy to use, anyone can get a quick injection of cash with MoneyLion.
Protecting Your Financial Future
You might feel like you need to take the first loan you find if you’re in a sticky situation. However, it’s important to remember that you do have options. Research all of your loan options before you commit to one to ensure that you get the best terms possible.
Do you need cash fast without worrying about fees or high interest rates? It’s never been easier to get started with MoneyLion. Download the MoneyLion app from the Google Play or Apple App store today to get started.