In a perfect world, we would not be stuck in an eight-hour job. We would be in Hawaii, sipping Mai Tais without having any (financial) cares. But in reality, we have to work hard to get some semblance of comfort in our twilight years.
What is even sadder is that we have to juggle our finances to keep up with our bills. When we find ourselves in a (financial) tight spot, personal loans can give us some breathing space. But the amount available for us to borrow greatly depends on the lender and our credit score.
You can even borrow $100, but this type of loan comes with high interest rates. If your savings cannot cover the unexpected expense, a small loan can work for you. But there are cheaper alternatives.
What Is the Least Amount that I can Borrow?
As mentioned earlier, the amount you can borrow for small personal loans depends on the lender. Each one has a different range of amounts. Those amounts can vary widely, from a meager $100 to a whopping $100,000. According to the US Chamber of Commerce, people typically borrow $8000, while an Experian report found most consumers owed an estimated $16,000 (which may constitute more than one loan).
If you have noticed, these amounts are in the thousands. Most of the time, people take out personal loans for one-time purchases and repay their debt in fixed installments over the course of several years. The most common reasons people borrow money include debt consolidation, medical expenses, home renovation, child adoption, or a wedding.
If you want to take out a smaller amount, like a few hundred dollars, you can go to credit unions or community banks, or opt for secured personal loans. But these alternatives are less common. Most of the time, you can borrow a small amount without any collateral because your application is assessed on your creditworthiness and financial health.
What Are the Pros and Cons of Small Personal Loans?
Like any endeavor, you must understand the upside and downside of taking out small personal loans. In this scenario, knowing the pros and cons will prevent you from spiraling further down. Let us first tackle the benefits.
Potentially Competitive Interest Rates - Typically, interest rates on personal loans are lower than credit cards. You will likely enjoy some savings over the life of the loan.
Lesser Risk of Overextending Yourself - Considering that you are taking out a smaller loan, you may be able to pay it off faster.
Now, let us discuss the downside of small personal loans. Here they are:
Fewer Choices - Unfortunately, not many lenders offer this type of loan. Thus, you will not have a lot of options. This scenario makes it hard for you to compare rates and fees.
Faster Repayment Schedule - Some smaller loans have short terms that require quick repayment.
Even if you are careful with your finances, sometimes, calamity strikes, and you are forced to take out small loans. Doing so will lessen your problem or even solve it. But you have to ensure that you come up with a repayment plan to avoid additional stress.
If you think that you need to borrow money, you must immediately reach out to Shelby Finance Company. We do not only offer small personal loans, but we take pride in our ethical practices, so contact us today to learn more!