Small loans online can provide you with quick cash when you need it. However, what lenders define as “small” varies, as does the process.
Some lenders make the application process very complicated. Others take a long time to release funds and charge high fees.
Clearly, you don’t want to go through any of this when you want money now. You’re not asking for hundreds of thousands of dollars, so the process should be simple and straightforward.
Here’s what you should look for and what you should avoid if you want to get a small loan online today.
Check Their Minimum & Maximum Loan Amounts
As mentioned, every lender defines small in their own way. Generally, most lenders don’t offer loans under $1,000, but a few may go as low as $500.
If you’re looking for more money, lenders also cap the maximum allowable loan amount. For some, small may mean only a few thousand dollars, while others may offer over $10,000.
Clearly, there’s no point in choosing a lender that will only lend you $1,000 when you only need $500. Equally, you won’t want to waste your time on an application if the lender can’t possibly lend you as much as you need.
Review Their Application Process
Small online loans should offer a simple process. Otherwise, they can take too long to be useful if you need money straightaway.
By simple, we’re referring to the complexity of their application form. Are they asking you for information on where you worked, lived, and banked five years ago? Or are they only concerned with where you stand now?
A basic online application form shouldn’t take more than 15 minutes to complete. A good lender will ask for the usual data such as your name, address, telephone number, email address, etc.
Additionally, you should be able to apply at any time since these are small loans online. Good lenders make it convenient for you, not their business.
Find Out How They Verify Your Income
Surprisingly, many online lenders are still stuck in the past. Even though you’re applying on the internet, they want you to either drop off proof of income or upload documents.
Luckily, this isn’t necessary through good lenders today. Instead, they verify your income electronically through bank statements. The lender can confirm your income, but they can’t peer into your personal banking details.
Clearly, you don’t want to go through a lot of hassle when you apply for small loans online. Always choose a lender that offers electronic income verification.
Will They Use a Soft of Hard Credit Inquiry?
Most lenders will check your credit to determine whether you are credit worthy. However, they can choose either a “hard” or “soft” credit inquiry when they do and these affect you and your credit in different ways.
First, a hard credit inquiry can lower your credit score by up to 5 points. This applies whether you’re approved or turned down. Second, a hard inquiry stays on your credit file for up to three years and lenders pay attention to them. Finally, if you have several on your credit file in a short period, they may consider this a sign that you’re trying to take on more credit than you should.
On the other hand, a soft credit inquiry does not impact your credit score. It does appear on your credit file, but lenders pay little attention to them. They’re usually used in a pre-approval process, which doesn’t necessarily indicate a serious attempt to borrow. Borrowers can “see” what the lender has to offer and then decide whether they want to move forward. Consequently, it always best to choose a company that uses a soft credit inquiry and the pre-approval process.
What Income Sources Will They Consider?
You can narrow your search considerably if you earn income from sources other than a regular job. The majority of lenders make this a basic requirement.
However, some good lenders accept applications for those that earn income in other ways. For instance, you may be self-employed or draw a private or government pension.
Basically, if you’re paid regularly through direct deposit, you can find a lender that will consider your loan application.
Some Small Loans Online Require Collateral
Unfortunately, some lenders do require collateral such as a house or car to back loans. Fortunately, this isn’t the case with all lenders.
There’s absolutely no reason to risk your assets, especially when you want to borrow under $15,000. A good lender will grant credit based on your income instead.
Minimum Credit Score Requirement
Even though you’re trying to borrow a relatively small amount of money, many lenders have a minimum credit score requirement. They want this, because they consider it a sign that you’re more likely to repay your loan.
Regrettably, many people do not meet this minimum credit score requirement. This could be due to a small problem on their credit report or just because they have a short credit history.
Luckily, good lenders don’t have this requirement. Instead, they make their own assessment based on many factors. As a result, those with less than pristine credit often qualify.
Licensed or Unlicensed Lender?
Legally, online lenders are required to have licenses in Canadian regions. However, some don’t bother with legalities.
Dealing with an unlicensed lender puts you in a very dangerous position. They aren’t bound by your regional lending practices and you have little protection through consumer laws.
Besides that, you may become involved in a scam and identity theft. If the lender does grant you a loan, they can charge you very high fees and use illegal methods to collect their money. Always choose a lender that is licensed in your province or territory.
Check Their Fees & Penalties
Unfortunately, many online lenders make it appear certain fees are standard within the lending market. However, in many cases they are not.
For instance, some charge an “origination” fee just for setting up your online account. Others penalize you if you want to accelerate your payments or want to pay your loan off before the loan end date.
Good lenders don’t charge an origination fee or penalties for pre-payment. Generally, the only time you should pay extra is if you don’t meet your loan obligations. In this case, you would pay extra interest and perhaps an NSF fee if you don’t have funds in your account.
Review Their Basic Qualification Requirements
You would think that lenders would be eager to tell you their qualification requirements. However, once you start shopping around, you’ll see this is not the case.
Instead, they want you to fill out an application form. This makes no sense. Why would you want to waste time completing an application form, if you have no chance of qualifying for a loan?
Always look for a lender that tells you what they need from you. This should include their work, residence, and banking stability requirements. Some lenders will delve deeply into your past, while others are only interested in your current position. Clearly, lenders with shorter stability requirements improve your chances of approval.
Decision & Funds Release Timeline
No one wants to be sitting around for hours or days waiting to hear from a lender. Good online lenders offer a decision within minutes and provide your loan terms and interest rate too.
As well, should you decide to move forward, they should offer digital contract signing. There’s no reason for you to visit an office to sign your loan papers.
Finally, once you’ve signed, they should have money in your bank account quickly. Check whether that is hours, days, or weeks.
FlexMoney’s Basic Loan Requirements
FlexMoney is a transparent, ethical lender. Here are our basic loan requirements and when we can’t consider your application:
- Net monthly income of $2,000, or more, from the same source for at least three months
- Open, active account with a Canadian financial institution with at least three months of transactions
- Canadian citizen
- At least 20 years of age
- Valid email address and mobile phone number
Sorry, we can’t help if:
- You earn income through Employment Insurance, the Disability Tax Credit, or COVID-19 benefits
- Currently involved in a bankruptcy, consumer proposal, or credit counselling program.
Our Small Loans Online Offer Many Benefits
If you’re considering a small online loan, here are a few of the benefits FlexMoney offers:
- Loans between $500 and $15,000
- 15-minute application form
- Soft credit inquiry
- Electronic income verification
- Various income sources considered
- No collateral
- No minimum credit score requirement
- Licensed lender in Ontario, British Columbia, Alberta, Nova Scotia, Saskatchewan, Newfoundland & Labrador, Prince Edward Island, and Yukon Territory
- No origination or prepayment fees
- Straightforward qualification requirements
- Decision within minutes
- Digital document signing
- Funds in your bank account within 24 hours, if you sign your loan contract during business hours
- Canadian customer service representatives and telephone, email, and online customer service options
Find Out More
If you want to know more about FlexMoney or you’re ready to start the application process, please visit our website. You can also find an in-depth FAQ page there with answers to commonly asked questions.
FlexMoney offers small loans online that surpass the competition. If you need more details on our installment loans, we offer it here. Get the money you need today, without the hassle.