Whether it’s your personal finance or you’re trying to grow your business, you’ll undoubtedly run into at least a few financial issues. You can’t know for sure if your financial decision may turn out to be a mistake that will lead to even more problems. As a matter of fact, 29% of startups fail because of a financial mistake, while the most common reasons for an individual consumer’s financial issues is poor money management and financial illiteracy.
That being said, the total household debt in the U.S. is $12.84 trillion, in the UK it’s £1.57 trillion and Australia $2.47 trillion. However, not everyone is up to their ears in debt. Most individuals and business owners alike, have credit card or loan debts to pay off. Still, banks don’t usually give good loan approval conditions and they tend to be selective if you have a bad credit history. That’s where small loans can make a big difference. Let’s have a look.
Paying off the credit card debt
People nowadays use credit and debit cards more often than cash. After all, plastic is more convenient, especially since you can make purchases with a swipe almost anywhere and you don’t need to carry cash on you. In addition, credit cards help you avoid the unpleasant truth that if you can’t buy it with cash, you can’t afford it. That means, that credit cards will allow you to buy stuff you can’t afford.
However, as convenient as credit cards can be, people are usually unaware of the financial pitfall they produce. For instance, interest rates can go up to 20%, yearly fees with 14%+ interest rate, late payment fees, over-the-limit fees and the worst of them all – minimum payments. That’s why credit card debts can set you back for years. Small personal loans can help you pay off your credit card debt before it’s too late and you won’t have to worry about sky-high interest rates.
People go into debt for various reasons. Sometimes you go over the limit on your credit card while on a vacation trip, or you take up a loan to purchase a vehicle or skip paying your bills this month because you’ve spent too much on your home improvement project. Businesses, on the other hand, may take a loan to procure inventory, overspend on setting up an office or max out their credit card while networking. Regardless of the reasons, you may end up in a situation where you have financial leaks at more places at once.
That’s when business owners and individuals decide to consolidate their debts. Simply put, you combine all debts into a single debt with favorable conditions, such as monthly payments and interest rates. In that case, applying for small personal loans might be an ideal solution for you. Small personal loans are unsecured, which means there’s no need for collateral, lenders usually don’t care whether you have good or bad credit history and interest rates are reasonable.
You can never know whether you’ll end up in an emergency situation, where you’re in desperate need of funding that you don’t have at the moment. For instance, you might have to pay for medical bills or car repairs. Also, if you’re a business owner, you might have to pay your employees, but the payment of invoices hasn’t landed yet. In those situations, you might go to a bank for a loan.
However, bank loans usually have high interest rates for small loans and you might get rejected or even charged with extra interest if you have a bad credit score. In addition, the approval process might take too long. On the other hand, small loans may prove more reliable in those situations, especially because they have favorable interest rates and the approval process can be completed in 30 minutes.
Repair your credit score
Many people have an average credit score. The main reason is that people are often late with payments, have credit card debt or have a long credit history. Having a bad credit score means that lenders will be more cautious when lending you credit.
Moreover, you may experience significantly higher interest and mortgage rates when having a bad credit score. In most cases, people have a bad credit score because they’re simply late with bill payments. In fact, payment history takes 35% of your credit score. A personal loan can help you pay your bills on time or pay off a credit card debt and save you money on interest rates associated with a bad credit score.
Small loans are unsecured, have good interest rates and can get you instant cash in less than an hour. That’s why they can make a big difference in any unpleasant financial situation you may find yourself in.