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Small Loans

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Small loans are usually unsecured loans ranging from $300 to $2,000, with loan terms from 16 days up to 1 year. The turnaround time for a small loan is often fast. An application can be completed in a couple of minutes and, if approved, you could have the money the same business day.

What Do I Need to Know About Small Loans?

Fast turnaround time

Lenders often have a quick application process, with some offering 60-minute loan approval for loans completed within business hours.

Loan Amount and Loan Terms

Small loans often amount to $2,000 and below with a loan term capped of 16 days to one year.

Unsecured loan

Loans below $2,000 often do not require any form of collateral for loan approval.

How do Small Loans Work?

Application processes for small loans are usually 100% online. You will be asked to provide general information about yourself, your contact information, work status, and residential status. You will also need to provide a minimum of 90-days worth of bank statements. This can be done online through Friendly Finance loan application form and is very secure. The assessment of bank statement data is a legal requirement for compliant lenders as part of its regulation commitment to accurately assess your affordability based on your current income and expenses.

Here’s a step-by-step guide to help you navigate through the process:

1. Submit Your Application

Begin by filling out the online application form. You can do this at any time and from anywhere, ensuring convenience and flexibility. The form will prompt you to answer a few simple questions to get started.

2. Provide Necessary Documents

As part of the application, you will need to upload your bank statements covering the last 90 days. This is crucial for lenders to evaluate your financial health and compliance with legal regulations.

3. Receive a Conditional Loan Offer

After submitting your application and documents, you may receive a conditional loan offer. This offer will outline the terms of the loan while your application is reviewed for final approval.

4. Await Final Approval

Your application and documents will be thoroughly reviewed. The lender will assess your affordability based on the provided information and your current financial situation. Expect to receive an answer as quickly as possible.

5. Get Your Money

Once approved, the loan amount will be transferred directly to your bank account. Many lenders use instant transfer services, allowing you to access your funds in a timely manner.

By following these steps, you can efficiently apply for a small loan online, ensuring that you meet all necessary requirements and receive your funds promptly.

What Can a Small Loan Be Used For?

When unexpected expenses arise or when planning helps isn’t quite enough, a small loan can be a lifesaver. Here’s how you might use these financial boosts:

Vehicle Repairs

Sudden car troubles can throw a wrench in your daily routine. A small loan can help cover mechanic bills, getting you back on the road without delay.

Bridging Paycheck Gaps

Sometimes, the end of the month feels a bit too far away. Use a small loan to bridge the gap between pay cycles, ensuring you can meet life’s demands without stress.

Travel Plans

Dreaming of a quick escape or a family holiday? A small loan can make that dream a reality, providing the funds you need to explore new places.

Unforeseen Expenses

Life is full of surprises, not all of them pleasant. Whether it’s a sudden medical bill or an unexpected home repair, a small loan can offer the support needed to handle these surprises smoothly.

Celebrating Special Moments

From birthday parties to holiday celebrations, a small loan can help you create unforgettable memories with loved ones without financial stress.

Home Maintenance and Improvements

Whether it’s a leaky roof or a much-needed renovation, small loans can help maintain and improve your living space, turning your house into the home you love.

Healthcare Needs

Medical expenses can add up quickly. A small loan can assist in covering the costs of prescriptions, routine check-ups, or emergency care, so you can prioritize your health without worry.

Taking out a small loan can provide the necessary funds to manage these situations effectively, offering peace of mind and financial flexibility.

Advantages of a Small Loan

Convenience: You can apply for small loans through an online application form or the downloadable app of the lender. Only a few lenders will need to speak with you before giving a loan decision.
No need for security or collateral: Small loans are often unsecured because the risk it entails on the end of the lender for small loans is minimal compared to medium- to large-amount loans.
Perfect for emergencies: Some small loans can offer same-day funding provided you submit the loan documents before the daily cut-off.
No hidden costs: Feel confident knowing you’re getting the best deal possible with transparent fees and charges. This transparency ensures you can budget more effectively and avoid any unexpected financial burdens.

Disadvantages of Small Loans

The following are the drawbacks of taking out small loans:

High fees: Small loans have a monthly fee cap of 4% of the total loan amount and a one-time establishment fee of 20% of the loan amount. This rate is relatively higher in comparison with long-term personal loans.

Limited loanable amount: Small amount loans provided by lenders are typically in the range of $100 to $2,000. If you are in need of a higher amount of loan, you will need to take out a personal loan instead.

How to Find the Best Small Loan in Australia?

Choosing the best small loan in Australia depends on your current needs and situation. Here are things to consider to help your search.

Lenders with transparent fees: Always check for lenders with transparent fees. Check to make sure the cost of borrowing is in line with the regulation and there are no hidden or unexpected costs.

Australian Credit Licence: Do not borrow money from a company that doesn’t have a visible Australian Credit Licence number.

Check customer reviews: Customer reviews can tell you a lot about the customer support offered by a lender. It will help you understand if the lender pays attention to their borrowers.

You can use Friendly Finance to search for a small loan provider today. Through one application, we search our direct lender network to find you an eligible lender within minutes. Our search is free to use with no obligation to take out a loan if you are matched with a lender.

Are There Any Fees Associated with Small Loans?

The following are the repayment fees associated with small loans:

Monthly fees: The regulatory limit for monthly fees for small loans (loans amounting to $2,000 below) is 4% of the total loan amount per month.

Establishment fees: The regulatory cap for one-time establishment fees and application fees for loans amounting to $2,000 and below is 20% of the loan amount.

To better understand these fees, consider a specific example: Borrowing $1,000 over a 3-month period. This loan would incur a 20% establishment fee, amounting to $200. Additionally, there would be a monthly fee of 4% of the loan amount, which is $40 per month. Over the 3 months, this totals $120 in monthly fees. Therefore, the total fees and charges for this loan would be $320, leading to a total repayment amount of $1,320.

Other fees to consider are the default fees, which should not exceed 200% of the total loan amount, and the loan enforcement fees incurred if you default on your payments. You will also need to consider and check for dishonour fees and handover fees if you fail to pay your loan on time.

Loan Term Considerations: It’s important to note that the minimum loan term is 2 months, with a maximum of 12 months. Understanding the term length can help you gauge the potential costs over time.

This example illustrates how fees accumulate and highlights the importance of knowing all possible charges, ensuring you make informed borrowing decisions.

Tips for Managing a Small Loan

The following are the tips for managing small loans:

Borrow within your means: It may be tempting to borrow as much money as possible. However, if you cannot afford repayments and default, it could lead to a cycle of debt. Make sure you only borrow what you need and meet your monthly repayments.

Do thorough research: before undertaking multiple loan applications, do your due diligence on the lender and the loan product they offer. This will prevent you from having ‘hard’ enquiry records on your credit report if you have unnecessary loan applications.

How Would You Make Repayments for a Small Loan?

Loan repayments for small loans are made in weekly, fortnightly, or monthly instalments via a direct debit arrangement from your nominated bank account. Regulations also set the minimum repayment period for loans $2,000 and below to 16 days, and a maximum loan repayment period of one year. Your repayment period and the amount will be outlined in your loan agreement, so make sure you review this before signing.

Understanding and Managing Your Loan Repayments

Automatic Transfers: Your repayments will be automatically debited from your account on the specified dates, ensuring a hassle-free process without the worry of missing payments.
Review Loan Costs: We encourage you to review the detailed loan costs provided. This will help you understand your repayment schedule and the total cost of the loan.

Facing Repayment Difficulties?

Reach Out for Support: If you anticipate any difficulties with an upcoming repayment, it’s important to address them early. Contact our support team, who are ready to assist and discuss potential solutions tailored to your situation.

By staying informed about your repayment obligations and reaching out for help when needed, you can manage your loan effectively, ensuring a smooth financial journey.

How Do I Compare Loan Options Without Hurting My Credit Score?

To compare loan options without affecting your credit score, you can compare publicly-available loan information based on your specific loan needs and preferences. It is not recommended to make loan applications without doing thorough research first, as lenders might make ‘hard’ enquiries on your financial background. These ‘hard’ enquiries will pull down your credit score.

You can perform basic checks on the following when comparing small loans online:

Monthly and one-time fees: Fees associated with the loan should not exceed the regulatory limit of 4% of the loan amount monthly, and 20% of the loan amount as the one-time establishment fee.

Fee transparency: For any small loan, fees should also be transparent and should not include other unnecessary fees that will be deducted from your loan funds or will be added to your total loan payments.

Turnaround time on approval and access to funds: Determine if you want to apply for lenders with quick loan approval, quick loan release, or both.

Reviews online: Check whether the loan product has excellent customer service, quick loan approval, and an easy application process from customer reviews online. Check as well how some customers got rejected and how some got approved through the course of the application process.

Remember, Friendly Finance can be used to search a direct lender network without performing a credit enquiry. Our service is free to use so why not give us a go today.

Small Loans FAQs

How do repayment terms differ between small loans and payday loans?

When considering repayment terms, payday loans and small loans offer noticeably different approaches. Payday loans usually require borrowers to repay the full amount borrowed by their next paycheck, often within two to four weeks. This can create financial pressure as the lump sum is due quite rapidly, which might be challenging for some borrowers to manage.

In contrast, small loans provide a more extended repayment schedule. These loans allow borrowers to spread their payments over several months, resulting in smaller, more manageable installments. This approach can help alleviate financial stress, as it integrates more easily into monthly budgeting.

Key Differences:

Payday Loans:
- Full repayment typically within 2-4 weeks.
- Higher immediate financial burden.
Small Loans:
- Extended repayment period over several months.
- Smaller, more affordable installments.

Understanding these differences can empower borrowers to choose the loan type that best fits their financial situation and repayment capacity.

What is the difference between a small cash loan and a personal loan?

When choosing between a small cash loan and a personal loan, it’s crucial to understand the key differences to make an informed decision.

Loan Amounts:

Small Cash Loans: Typically range from $200 to $2,000. They cater to immediate, short-term financial needs.
Personal Loans: Generally available for larger sums, usually from $2,001 up to $50,000 or more. These are suitable for bigger expenses like home renovations or debt consolidation.

Repayment Terms:

Small Cash Loans: Often have shorter repayment periods, usually a few weeks to a few months. The focus is on quick repayment to cater to urgent financial requirements.
Personal Loans: Offer longer repayment terms, ranging from one to several years, providing more time to pay back the borrowed amount.

Interest Rates and Fees:

Small Cash Loans: While they offer quick access to funds, they often come with higher interest rates and fees due to the convenience and short term.
Personal Loans: Tend to have lower interest rates compared to small cash loans, reflecting the larger amounts and longer repayment terms.

Application Process:

Small Cash Loans: Generally have a simpler, faster application process with minimal documentation. This makes them a popular choice for urgent cash needs.
Personal Loans: May require more documentation and a thorough credit check, taking longer to process but often providing better rates based on creditworthiness.

Purpose:

Small Cash Loans: Ideal for covering unexpected expenses like medical emergencies or car repairs.
Personal Loans: Perfect for planned expenses, such as weddings, vacations, or educational costs.

In summary, the choice between a small cash loan and a personal loan hinges on your financial needs, the amount required, and how long you need to repay it. Understanding these differences can help ensure you select the right type of loan for your situation.

Now that you know how we work, let us get you a loan.

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