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.
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