Our Guide to Small Loans – What to Know & How They WorkJanuary 09, 2020
There may be a point in time when some people are in such a bad financial situation that they have no choice but resort to obtaining loans. In most cases, however, they need to get loans but can’t afford big ones. Chances are that they get rejected due to bad credit scores, insurmountable debts, or unrealistic interest rates. Because some of them do not know the whole process of applying for a loan and getting approval, they end up making sacrifices.
What many of them fail to realize is that getting small loans is actually a viable solution for their financial difficulties. Small loans can help in many ways, which are a far better alternative than any high-paying loans out there.
In the following section, we’ll cover what small loans entail, what common types of loans are, how they work, and what the application process involves. Keep on reading to find out more.
Getting yourself prepared with the right knowledge of applying for a loan is paramount. The initial step is to look for a lender and apply for a particular loan. Consider the following information below:
- Look for a lender: This is the most crucial part of applying for a loan as your decision can either make or break your financial status. Keep in mind that there are many scammers out there, which is why you should be wary of choosing the right one. Even if these lenders are legitimate, you should opt for the one that is best suited for your financial needs. Know that each lender has a unique policy on how they handle money, so you better get acquainted with the terms and policies they offer before choosing one.
- Apply for a loan: When it comes to the submission, there are requirements that you need to comply with, such as presenting your lender with credentials depending on what kind of loan you apply for. After these, you will have to wait for several days for verification and the final loan decision.
Factors affecting loan approval
The approval of your loan application is typically based on several factors. Below are some of these:
- Credit score: This is the most influential factor because your credit score tells lenders whether or not you’re worthy of receiving a loan.
- Credit report: This is what lenders use to know if you’re responsible with your finances as they will look at your credit history.
- Lenders: They can also be factors affecting how much you get. All lenders have different policies and financial standing, which can affect loan approval and how much they’ll lend you.
Different types of small loans
There are different types of small loans that you can choose from. Below are some of the most common and beneficial for your needs:
- Bad credit loans: These loans are ideal for people in bad credit and those with no existent credit scores. As a result, applying for this loan removes the need to worry about your credit score altogether.
- Payday loans: These loans are what many millennials seek after. For one, they’re an affordable option for borrowing. Two, they are easy to secure, just like bad credit loans. Ultimately, payday loans are great because you can get them when you need them.
At this point, you now know that even if you cannot apply for bigger loans, that you still can get money from smaller loans whenever you need them. Consider the valuable information mentioned above regarding small loans, and you’ll know how to navigate through the financial trickle.
If you are in South Africa and are looking for small little loans, get in touch with Hoopla Loans today! We’re happy to help you.