When you find yourself holding an unexpected bill it can cause your stress level to rise. The last thing you need is more headaches. If you have no credit, or bad credit, you may be unsure what options are available to you. Fortunately, you may still be able to get funds through something like a small loan with an easy application process1.
What is a Small Loan?
A small loan, sometimes called a short-term loan, is a loan that borrowers can use for things like covering emergency expenses. Unlike something like a mortgage, you aren’t required to use whatever you are spending the loan on as collateral. There are two different types of small loans, unsecured and secured.
When people think of loans, they often think of things like mortgages and car loans, but there is another common type of loan. It has a number of different names, for example:
- Small Loan
- Personal Loan
- Short-Term Loan
Unlike mortgage lenders, many small loan lenders exist entirely online. This means you can get a loan without ever having to leave your house. And you can choose from countless lenders. You’ll want to be careful about which lender you do choose, however. They may appear to be offering you a good deal, but if your lender is based in another country, you may have trouble contacting them if there is an issue. Differences in lending laws between the USA and the lender’s country may also cause problems. Because of this, many people choose to get their small loan from a US-based lender. There are two major types of small loans, secured and unsecured.
What’s the Difference Between a Secured Loan and an Unsecured Loan?
An unsecured loan is essentially made to the borrower on the promise that they will pay the lender back. Because of this, lenders use things like credit history or proof of income to determine not only how much a borrower can pay back, but the likelihood that they will default on the loan. In contrast, a secured loan is one in which the borrower pledges something of value to the lender against the loan. Meaning, the borrower promises to give the lender whatever they pledged if they default on the loan.
If a borrower defaults on their loan, that is, misses too many payments, the lender has the right to repossess whatever collateral was used to secure the loan. The exact procedure varies by state, and from lender to lender. In general, lenders will alert borrowers that they are missing payments. Some states require a notice to cure, which informs the borrower that they have a window of time to pay the balance of the loan. If the borrower fails to get current on their payments, the lender can repossess the collateral. Then the lender can auction the collateral to recover the balance due.
What are the Advantages of a Secured Loan over an Unsecured Loan?
At first blush, it may appear that a secured loan is worse than an unsecured loan. After all, the borrower could lose their collateral and the lender might not make their money back auctioning the collateral. However, secured loans have a number of advantages over unsecured loans:
- More-lenient credit history requirements: Because the loan is secured with something the lender values that can be repossessed, they aren’t relying solely on the borrower’s word that they will repay the loan. As such, lenders don’t need to depend so heavily on things like credit score when deciding whether or not to offer a loan to a borrower. They can use the value of the collateral and the borrower’s income to determine how much they are willing to lend.
- Better loan terms: Because lenders can use the sale of the borrower’s collateral to recoup their money if the borrower defaults, it lowers their risk. Even in the event of a default, they should be able to recover at least some of what they are owed. This lowered risk may translate into better terms for borrowers. These better terms can take a variety of forms. For example, the lender may offer to provide them with more money than if they had nothing to secure the loan, or even a better interest rate.
How do I Pick a Small Lender?
The decision of which company to get your loan from can have a major impact on your experience. You’ll want to select a lender that’s been around for a while and has a good reputation. Companies with established reputations have more to lose if they mistreat their customers, and a lot to gain if they treat their customers well.
How do I Get a Small Loan?
Getting a car title loan can be simple. Take advantage of the streamlined application process by following the steps below and you could potentially receive your title loan of up to $30,0001 in as little as one business day3.
First, decide the most convenient way to contact LoanMart:
- Visit a participating store
- Call 1-855-422-7412
- Sign up online
Once you’ve decided how to get in touch, all you need to do to apply is:
- Fill out the registration form
- Submit your documents
- Sign your agreement1
Depending on the small loan (car loans, personal loan) you may get denied a small loan for a variety of reasons. Although a small loan is known to be one of the more accessible ones for people, most small unsecured loans have very strict requirements that must be met.
Whether one is getting them from a bank or another financial institution, here are a few common loan requirements you are expected to have for most unsecured loans, no matter how small or big they are.
- Credit history: Most of these small loans are likely to do a few checks on your credit, especially if there are signs of problems that you may have had in paying things back.
- ID and SSN: Most identification is common for small loans but expect the more restrictive loan requirements that ask for different types of identification information that you may not want to share.
- Employment history: They may ask for previous employment information, as well as your current employment that helps them keep track of what your income is like and how you will be able to pay back the loan.
- Insurance information: If you have insurance, they may want to investigate what kind you have and whether it affects your credit in a positive or negative way.
- Income: A small loan lender may want to determine how much you make, which allows the lender to figure out whether you could be trusted in paying off the small loan based on your income.
- Credit score: A credit score may mean the difference when it comes to getting a small loan. If you pay off your debts, have a credit card, and have paid off loans in the past, your credit score goes higher. But of course, the opposite might occur that could leave you with a bad credit score that may make it harder to get a small loan from anywhere (or anyone).
Based on all the things that small loan lenders are looking for, getting denied is a huge possibility. But what can you be denied for when applying for a small loan?
What Can I Get Denied for On a Small Loan?
A small loan may sound simple enough to get, but all the information you give to apply is largely determined by your lender. With that in mind, here are just a few reasons why you could be denied for a small loan.
Denied because of credit score
Depending on the lender, your small loan application could be denied immediately if your credit score is below their average, which means many lenders for a small loan could deny you across the board.
Denied because of income
One must prove their income when applying for any kind of loan (even a small loan), so if you’re income is deemed insufficient, it means that you don’t make enough to qualify for a lender’s small loan. Self-employed individuals may even have to go through several applications to prove their income as well.
Denied because of debt
Debt from things like a car loan or other small loans may make it harder to get another small loan. You may even have to wait a few more months before you could re-apply, especially if it means having to pay off your original loan before getting another one.
Denied because of poor documentation
Getting a small loan from a financial institution like a bank may require multiple documents and information for the process. Failing to submit any necessary documents could spell an automatic denial for many. Any wrong information filled out on applications may also serve as an automatic denial by the lender.
Denied because of error on credit report
Errors on things like your credit score or credit report are common and could easily stop you from getting your small loan. These errors could include incorrectly marked payments, closed accounts showing up as open, and even inaccurate late payments. Things like inaccurate payments could also hurt your credit score and make it even harder to get a small loan from any lenders.
Denied because of thin credit history
Just like having too much debt could be a really bad thing, having no debt or no credit cards can be just as worse. Building good credit is the only way to get, well, good credit. Getting approved for a small loan may mean that having a thin credit file is a good reason not to trust you with that responsibility.
If a small loan sounds almost too restrictive, that’s because most lenders want to ensure that repayment for the loan given is possible and want to trust certain individuals with such a loan. However, there are also many alternatives to the small unsecured loan.
We at LoanMart believe that if you need fast funding that would be considered easy to receive1, with only a few loan requirements, then why not try applying for a secure title loan?
What is Proof of Income for a Car Title Loan?
Many people believe that they can only use a paystub as proof of income for a car title loan. In reality, there are a number of different options you can use to show proof of income. For example:
- Bank statement if you are self-employed
- Social Security benefits
How Much Money Can I Get for a Car Title Loan?
The amount of money you may be able to borrow for a car title loan depends on a few different factors1:
- Total income
- Equity in your car
- Loan terms
The two most important things are your income and the equity in your car. Ultimately, these will determine how much money you may be able to borrow1. A reputable lender will not generally give a customer a monthly payment that is greater than they can afford.
What are the Benefits of Getting a Car Title Loan?
There are several great reasons to get a car title loan:
- Low repossession rate
- Simple Loan Terms
- LoanMart Peace of Mind Guarantee1
Tips to Avoid Being Denied a Small Loan
When applying for a small loan, here are some suggestions one should consider before they pick up that pen:
- Look at your credit report before they do: Catch those credit report errors or look at your credit report so you know exactly what to expect before applying for a small loan.
- Make sure everything is up-to-date: Always be sure that your good credit is still good credit. Always be on the look-out for any past transactions or debts that you may have been holding off.
- See what lenders are looking for: Sometimes to see how a lender could deny you a small loan, you could check their website or requirements they are looking for. It’s never too late to get some research on a lender.
- Improve your credit as much as you can: Paying off debts could also be a way to improve that credit score.
Although there are so many ways to avoid being denied a small loan, there is still a chance that it could happen. But there are also some alternatives to things like a small loan from a bank. A car title loan for example is a secured loan that worries less about a credit check or how much debt you have.
How LoanMart Serviced Title Loans Could Be Better than a Small Loan
What exactly are title loans? In short, title loans are a kind of secured loan that requires collateral, which is how the trust between the lender and the borrower is established. If the borrower makes their monthly payments on time, they can freely drive their car.
But what are the loan requirements to be approved for title loans? Here are some of the things you need to provide in order to get a car title loan serviced by LoanMart:
- Proof of residence: To ensure that you live in the state that allows for title loans.
- Proof of income: To prove that you can pay for a title loan. Don’t worry, there could be a lot of ways to show proof of income.
- State-issued photo ID: This is just to identify who you are and confirm whether you are the owner of the vehicle.
Other documents needed are a copy of your qualifying title and several documents that you may easily find in your home.
Whether you have good or bad credit, the above loan requirements are virtually all there is to it.