Small Personal Loans
The pros and cons of small personal loans.
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No two financial situations are the same and as a result there are loans available in all sizes to meet all credit needs. Here's a guide to what matters when it comes to small personal loans.
Are you struggling financially?
If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday). If you are suffering financial problems related to the coronavirus pandemic you may be eligible for additional support. Find out more here: https://www.finder.com.au/coronavirus-financial-help
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
- For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
- Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
- If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
Sunshine Short Term Loans
- Loan Amount: $2,000
- Loan Term: 9-14 weeks
- Turnaround Time: 30 minutes - conditions apply
- Fees: 20% of loan amount + 4% of loan amount each month
- Bad credit borrowers OK
- Quick & easy Approval
Small personal loan options
What is a small personal loan?
A small personal loan is a form of credit that is between $100 and $2,000. These loans differ from regular personal loans in that they usually have shorter loan terms and have more flexible lending criteria. They are offered by non-traditional lenders. It's important to note that most personal loans from banks, like the ones in the table above, have a minimum borrowing amount of around $3,000 to $5,000.
Small loan options
There are a few different types of small loans to choose from, all of which can meet different needs.
- Payday loans.These are small, short-term loans that you can use to cover expenses that come up before payday. These loans may be an option for people who have negative listings on their credit file as the eligibility requirements tend to focus on income and the ability to pay back the loan rather than on your credit history. However, they attract much higher fees than other loans, and other options are usually better if available.
- Overdraft facilities.An overdraft gives the option of withdrawing more money than what's available in your account. The amount is generally quite small, usually, between $100 and $1,000 and users can overdraw up to a predetermined amount with set fees and rates.
- Lines of credit.A line of credit is similar to an overdraft facility, but the credit line isn't attached to your transaction account and you may be able to borrow more money. The user can withdraw up to a set limit at a set rate and will only be charged the rate on the amount withdrawn.
- Cash advance.A cash advance involves withdrawing money from a credit card. This type of credit starts accruing interest straight away, usually in excess of 20% p.a. Learn more about cash advances here.
- Good credit small loans. If you have good credit, you can still get a small loan.
What are the risks of small personal loans?
- Unreputable lenders. Check the lender has a credit licence and is not charging you more than ASIC allows. The lender should be easily contactable.
- Unaffordable repayments. Consider the size of the regular repayments and ensure the loan is able to be repaid during the loan term. If not, extra fees apply to extend it. Be careful, since repayment periods for these kinds of loans tend to be shorter than regular loans.
- Multiple applications. Every loan application shows up on credit reports. While lenders might not consider credit history, several applications within a short period can have a negative impact on your credit score moving forward.
- Check rates and fees. Establishment and monthly fees are capped, so be wary of lenders quoting prices beyond the legal maximum amounts. Be crystal clear on what will be charged for late payments or a default on the loan. The total cost of the loan matters here - lenders can charge interest rates on top of everything else.
- Long-term repercussions and legal issues. Once the loan agreement is signed, the customer is bound to its conditions until the loan and any associated rates and fees have been paid. Typically these loans are unsecured, which means that the lender can initiate legal proceedings against the customer if they can't repay.
How can you compare small personal loans?
Small personal loans have a few key features you can use to compare.
- Fees.Lenders will charge a range of fees for lending money. Check for upfront fees, such as establishment fees, and ongoing fees, such as annual or monthly fees. Other fees, such as those charged for early repayment, may also apply.
- Terms.Traditional personal loans are lent for loan terms as long as 7 years, whereas small personal loans are usually lent for terms of between 16 days and 1 or 2 years. You can usually borrow between $100 and $2,000.
- Repayments. Depending on the type of loan you choose, the lender may offer different repayment options. Some lenders may arrange your repayments in line with your income frequency and amount. Other lenders may offer other repayment features such as additional repayments or redraw facilities.
Pros and cons of small loans
- Quick access to funds. Some short-term loan brands offer 60-minute turnarounds (of course, conditions do apply)
- Borrow only what's needed. Applicants can request small amounts of cash, rather than having to borrow large sums of money and then pay it back, borrowing under $1,000 may be more financially feasible.
- Set repayment periods. Generally, small loan repayment periods are short and will be set to match the applicants next payday.
- Higher fees.Because small personal loans are offered over a shorter period of time, the fees and charges are often higher. This is to protect the lender in the event of default or late payment.
- Limited range of lenders. Depending on the applicant's credit history and income, there may be a limited selection of credit options. It's always important to compare the options before applying.
How to apply for a small personal loan online
Compare small personal loan options using the comparison table. If you find a loan you want to apply for, click the "Go to site" button. This will securely take you through to the lender's website to complete an online application form and provide personal and financial details. Some lenders offer fast approval and some may have the loan amount deposited in the designated account within 24 hours. To be eligible for a personal loan, applicants generally need to be over the age of 18 and a permanent Australian resident.
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