Small Personal Loans for Bad Credit

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$2,500
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No matter how small it is, any expense can be quite troublesome when it comes unexpectedly. Whether you need to get minor medical care, take your cat to the vet, or pay for car repairs, small personal loans can be one simple solution for all. These loans are also fairly available for people with bad credit. Here, you'll get all the information you need about small personal loans and how to find the right options for you.

What Are Small Personal Loans for Bad Credit?

As the name implies, small personal loans can only provide low amounts of money typically ranging from $1,000 to $5,000. These loans tend to have less strict requirements with relatively low-interest rates and can be available for people with bad credit, especially if the lenders are specialized in dealing with bad credit loans.

Small personal loans are popular because of the long repayment terms of about two to three years, making each monthly payment incredibly small. These types of loans are usually unsecured, meaning that it doesn't require you to put up collateral, and on average you will receive the money within one business day.

What Can I Use a Small Personal Loan For?

Generally, there is no limitation on what you can use the funds for. However many people take out small personal loans for the following purposes:

  • To cover emergency expenses: Small home improvements, car repairs, appliance replacement, minor medical treatment, and other urgent costs.
  • To organize events: Birthday parties, weddings, funerals, vacations, and other events.
  • To consolidate delinquent debts: Merging debts into one loan with better rates and terms.

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How to Qualify for a Small Personal Loan If I Have Bad Credit?

The best way is to find lenders that specialize in bad credit loans. However, to increase your chance even further, you may want to fulfill the following conditions:

You have a stable income to repay the loan on time

Lenders will assess your income to see if the loans are affordable for you. This income assessment is determined by your debt-to-income ratio. So, make sure the ratio is lower enough for the loan you want to take.

Your current credit is improving

Lenders will want to know if your old issues may cause obstruction in repaying the loan or prevent you from repaying on time. They will be more willing to overlook your bad credit if you have cleared out all of your previous debts.

The loans provide a better chance to improve your financial situation

See if the loan options can help improve your credit. For example, you may choose loans that can consolidate existing debts into one debt with lower interest rates and longer repayment terms. Knowing your sensible reason, lenders will be more willing to approve your application.

How to Compare Lenders of Small Personal Loans for Bad Credit?

The right lenders that offer ideal loan options for you may be different from others depending on your specific financial needs. However, there are some important factors you must take into consideration to make sure you choose the most advantageous options. Those factors are as below:

Lenders credibility

Always check customer reviews, comments, and feedback before you decide to go further with certain lenders. You may also want to look at the government sites to confirm that the lenders run everything legally.

APR range

The last thing you want is to choose loan options that do more damage to your credit. You can prevent this by evaluating the annual percentage rate (APR) of the loans. Loans with lower APR would pose less risk to your financial stability.

Application process

This process may vary by lender however it is recommended to choose lenders that apply a prequalification, especially if you have bad credit. Through the prequalification, you will know if you can qualify for certain loan options before taking further steps that can risk damaging your credit ratings.

Loan amounts

Make sure the lenders you choose have loan amounts that can fit your purpose. Some lenders may only offer options with big amounts that pose more risk if you only need small amounts. It is advised to take amounts no bigger than what you need.

Funding speed

Find out when you can receive the money and see if the timing suits your circumstance. Some lenders can provide it within one business day while others may take a few business days.

Repayment term

Pick repayment terms that are most convenient for your situation. While shorter terms may give a better chance to pay off the loan quickly, sometimes you need to choose longer terms to make sure you can afford each payment on time.

How to Get a Small Personal Loan for Bad Credit With CocoLoan?

As a legally regulated loan broker, CocoLoan connects you to potential lenders from trustworthy networks that most possibly have the right loan options for your situation. If for example, you have bad credit, our system will only match you to lenders that are willing to overlook your bad credit. You can enjoy this service by following some easy steps below:

  • Submit your loan request: Let us know what kind of loans you are looking for by filling out the form on our website.
  • Review available options: Receive offers from potential lenders and start comparing the rates and terms.
  • Choose the right options and make an agreement: Lenders would lead you to a secure web portal to sign the agreement. Make sure you are fully aware of all the points mentioned in the agreement.
  • Get the money: You may receive it within one or a few business days at the longest.

How much would you like to borrow?

$2,500

What Are the Pros and Cons of a Small Personal Loan?

As one of the easiest solutions to cover any small expenses, small personal loans have the following pros and cons:

Pros:

  • Mostly unsecured, meaning it doesn't require collateral from your assets
  • May accept a cosigner that can increase your approval chance
  • Fast funding averagely within one business day
  • Fixed monthly term with a relatively small amount for each payment
  • Fixed interest rate from the beginning to the end of the term

Cons:

  • The amounts are smaller compared to other types of personal loans
  • Borrowers with bad credit may get higher APR
  • May charge origination fees
  • May apply penalties for early or late payment
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