If you have poor credit, getting a small loan can be a great way to obtain the funding you need and start rebuilding your credit score. But you may not want to apply for the first loan you come across. To find the right loan for you, it’s smart to shop around and weigh a few factors when looking at each option. Here are several attributes you should consider when comparing small loans for poor credit so you can a find a loan option that meets your needs.
1. Loan amounts
When deciding which small loan is right for you, you should decide how much money you need. For instance, if you only need a few hundred dollars to tide you over until payday, a cash advance could suit you well. And an installment loan could work better if you need a larger loan amount to cover expenses. Keep in mind that various small-dollar lenders may offer you different-sized loans. So, it’s vital to research and talk with different lenders to see how large of a loan you can get.
2. Interest rates
The interest rate is the cost of borrowing the loan. A higher interest rate will cause you to pay more money, so in general, you should look for the lowest rates you can qualify for when shopping around. That said, don’t only consider interest rates when making your decision. A higher rate might be worth it if you can get a better term length or larger loan amount, or your lender is easier to work with.
3. Repayment terms
Loan repayment terms set how long you’ll have to pay back your loan. The longer the term, the lower your monthly payment is likely to be. Plus, you’ll have more time to make payments that build your credit. But keep in mind that a longer repayment term can mean you’ll be in debt for a longer time. On the other hand, having a shorter loan term means you may make higher monthly payments, but you’ll be able to pay off the loan faster.
4. Secured vs. unsecured
Secured loans require you to put a piece of property down as collateral, whereas unsecured loans do not. Secured loans can be easier to qualify for, but you risk losing your collateral if you can’t repay the loan. And unsecured loans don’t put any of your property at risk, but they can sometimes be harder to get approved for.
The bottom line
Small loans come with various features and benefits that make them suited for different types of borrowers. So, you’ll need to shop around in order to get an affordable small loan with terms that meet your needs. Make sure you weigh these four factors against each other and determine which ones matter most to you. Doing this as you compare options will help you guide your search and find the right loan for your financial situation.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
Name: Michael Bertini
Job Title: Consultant
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