1. Why is the interest rate of small loans high?
The most obvious reason for the high interest rates on small loans is that the lenders take on these loans at a much higher risk than traditional loans such as bank loans. Unless you have the assets to guarantee your loan or your credit score is good, the bank will not provide you with a loan.
This makes most Americans look for alternatives when they need emergency cash.
Of course, seeing an interest rate of 300% or a similar level can be shocking. However, what you really have to pay is a fee based on the loan amount. This fee varies depending on the state you live in, but it is usually around $15 for every $100 loan. Therefore, a loan of $300 will incur a loan fee of $45. Taking into account the risk of the lender, the charge rate is reasonable.
Regulations require payday lenders to display the loan interest rate (APR), even if the loan is always 30 days or less. This can be misleading because these types of loans are fee-based loans rather than 12-month interest-based loans.
2. Can I get a small dollar long-term debt forever?
Many consumer advocates focused on this point when making negative comments about short-term microfinance. We don’t want any consumer to fall into a debt cycle. Just repay the loan on time and it is easy to avoid getting into trouble. This will not incur any additional fees or fines.
If you miss the payment date, other fees and fines may increase. This is why we always recommend that you avoid repaying any loan you are not sure about when you are uncertain.
3. Can I trust a short-term lender?
A few years ago, there were many bad lenders in the market. Under government supervision, the industry has eliminated most of these unethical lenders. Flex Loans Online has been in business for many years and always follows best practices. We will do our best to ensure that the lenders recommended to you follow the best guidelines set by the OLA (Online Lender Association). OLA has strict guidelines and the lender must meet the requirements related to the organization.
So you can trust short-term lenders. Make sure to cooperate with organizations like Flex Loans Online, which have been in this business for many years and have provided emergency cash needs for countless Americans.
4. Can I get a small loan with a low credit score?
One misunderstanding is that if your credit score is poor, you won’t be able to get a loan from anyone. This is not true. Short-term lenders provide loans to people with very low average scores. In fact, most loans are to people with poor credit. This explains the higher risk of lenders accepting loans in this way.
Don’t worry about your low credit score. The key to obtaining a small loan is to have a stable income that can be verified. Short-term lenders do not perform strict credit checks. Instead, they see your income as a major factor in your ability to repay the loan on time.
If you decide to apply for a short-term small loan, Flex Loans Online is for you.