Compare small personal loans

Small personal loans – Find out the smart way to borrow less

A small-dollar personal loan can be used as a quick and convenient stopgap when you have an emergency car repair, medical bill, or other bite-sized financial need. However, it works a bit differently from the regular type of personal loan, and you might need some pointers to help you arrive at the best choice. Here’s BestFind’s guide on what you need to know about small personal loans in Australia.

What’s a small personal loan?

What can I use a small loan for?

Most personal loans have an up-to-you policy for how you use the funds. Some lenders will ask a few questions, but you’ll still get free rein if you’re using the money legally and for a worthwhile purpose. You can even use the payout to cover more than one expense as long as it’s not too much of a stretch. For instance, you can:

• Pay for emergency medical trips, or car, home, and appliance repairs
• Finance less pressing expenses like clothing, gifts, and other smaller purchases
• Top up your large wedding, travel, or home renovation bill
• Consolidate small amounts of debt

Types of small loans

Here are a few options that can be handy in cash-strapped situations where a little goes a long way:

• Small loans for good or excellent credit borrowers. When your credit profile ticks all the right boxes, some mainstream lenders will let you borrow small unsecured funds for longer periods. Such deals often have less expensive interest rates than payday loans and credit cards.
• Payday loans. Payday is usually always around the corner, but if you need a little push, a payday loan could be a last-resort option. Some payday lenders will want you to repay the whole amount in one go once your paycheck arrives. Others offer more flexible instalment plans of 3 or 6 months. Typically, payday loans have higher interest rates and fees but less stringent requirements. For instance, payday lenders usually offer small personal loans for bad credit borrowers.
• Credit card cash advances. Your credit card may not be suitable for some emergency payments, but you might still be able to withdraw cash from your credit card account. However, withdrawal limits are usually low, and like payday loans, this option is more on the expensive side.
• Line of credit loans. This option lets you borrow any amount up to a specific limit and at any time. This can be a flexible arrangement for borrowers who need to regularly dip into a small pool of extra funds. In some cases, the credit account links directly to your bank transaction account as with overdraft facilities. These allow you to withdraw money from your account beyond what’s available. Generally, you only pay interest on what you borrow, and if you have ‘revolving credit,’ you can continuously borrow and repay for as long as you’d like.

How do I compare small loans?

Use these factors to quickly sift through the available offers and find one that’s best for you:

• Interest rate. Go for low-rate deals when possible since it’s usually the first line of action to reduce finance costs. Also, check if the interest rate is fixed or variable.
• Fees and charges. Keep a watchful eye on fees that may end up weighing your budget down. These include upfront establishment fees and ongoing monthly fees. There’s also late payment and early payment fees.
• Borrowing limits. Look for a credit provider who allows you to borrow as low an amount as you’d like. That means you won’t be forced to take on extra debt you don’t need.
• Repayment schedule and amount. Find out if you can get a repayment plan and amount to match your regular cash flow schedule. You can also use our small personal loans calculator to discover different repayment options for monthly schedules.
• Repayment flexibility. This comes from the ability to make extra repayments that you can also borrow back when you need to (redraw facility).
• Response time. Small loan providers generally deliver on the same day or within hours or minutes. If it takes longer, the option might not be suitable for emergencies.

Pros of small loans

• They can be convenient when you don’t have an emergency fund or enough savings
• Flexible lending criteria
• Easy approval and quick access to funds
• Borrowing only small amounts makes it easier to repay
• It’s easy to find small unsecured personal loans, so you won’t need collateral to apply

Cons and risks of small loans

• Some disreputable lenders ignore fee caps and charge illegal rates that can derail you financially. Before applying, make sure the lender is licenced, authorised, and has good reviews. Avoid “no credit check” offers that encourage you to borrow irresponsibly.
• Because of their shorter loan terms, you can expect to pay higher interest rates so the lender can still make a profit.
• You may face legal action if you default.

How do I apply for a small personal loan online?

• Evaluate your options using the comparison table above.
• Check for lender requirements. These generally include being at least 18 years old, having Australian citizenship, and a stable, regular income.
• Click “Go to Site” once you pick out the right deal.
• Submit your loan application on the lender’s website.

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