Small loans are unsecured loans which you can borrow from a lender. These loans can be borrowed for a short term and for low value. They are also known as short term loans or little loans.
Whenever you are in an unexpected situation in terms of finance you can make use of your savings to deal with it. Although not all people have a habit of saving money. Also, if you want to withdraw some money from your savings account, you can be charged with the transaction fees. So in situations like this, you can go for a small loan which would take care of your unexpected expense.
Small loans are mostly used for some minor financial expenses like your phone bill, for house renovation or your vehicle’s servicing. If the situation requires a small amount, you can go for these little loans.
How Are Small Loans Different from Secured Loans?
When it comes to secured loans you have to keep an asset as a security until you make your loan payment in full. If you miss a few repayments you are at risk of losing your asset. The lender might repossess your asset as a last resort.
But in small loans, you don’t have to provide any asset as a collateral. You can get a small loan without any security. But if you miss any repayments you can be charged with a late fee by the lender. As these are a form of unsecured loans, the money you can borrow is low compared to secured loans.
How Much Can I Borrow With a Small Loan?
One of the most initial common question from the people is “How Much Can I borrow with a small loan?”.
A Small loan is not for the people who want to buy a large amount of money. With small loans, you can borrow an amount ranging from £50 to £3,000. Although there are lenders who provide little loans for an amount higher than that.
The repayment term for a small loan can be between 3 to 12 months, so select a time period in which you can make monthly repayments without missing any. Remember that these loans have a high APR compared to the secured loans. This is because of the risk the lender is taking by giving you a loan without any security.
Who Can Get a Small Loan?
When it comes to borrowing a small loan your credit history does not make or break your chances of getting a loan. Anyone having a poor credit history can apply for small loans. Also to be eligible for little loans you need to fit in the below criteria.
- Have an active UK bank account
- Be 18 years in age or above
- Be an owner of a phone with a working number
These are the minimum requirements for applying for a small loan. When your application gets approved the lenders forward the money into your account within 15 to 20 minutes.