According to research, the number of people taking small personal loans in America has increased by 25%. This means that, in today’s time, most Americans are short of savings. As a result, they start searching for an alternative way. In such a situation, a personal loan becomes the most flexible and reliable option.
Another research shows that most Americans apply for small personal loans to pay off existing obligations. They use the money for debt consolidation, in which paying off credit cards is the priority.
Besides, education, weddings, and travel are three important reasons Americans apply for personal loans.
After all, what makes people depend on personal loans so much? What exactly is its role? Get to know everything in this blog that talks in and out about small personal loans in America.
What is a Personal Loan?
A personal loan is ashort-term, unsecured loan that you can avail of without any collateral or guarantor. It is approved considering your repayment capacity, credit history, appointment history, profession, and income level. Another name for it is a multipurpose loan because you can fulfill any of your urgent personal needs through it.
| Features of Small personal loans | Eligibility for personal loans |
| No collateral, no guarantor | Minimum age 18 years |
| Instant approval decision | Should be the resident of the USA |
| Instant fund disbursal | A regular income is a must |
| High interest rates (customization helps) | Strong repayment capacity |
| Fully online procedures | A registered bank account is a must |
| Documentation | Verified residential address proof |
What are the Factors that Affect your Personal Loan Eligibility?
Although a personal loan is a short-term loan, there are some eligibility factors for it, too, which you have to take care of, no matter how urgent your need for money is.
If any of the factors given below is weak, then you may face difficulties in loan approval. Although direct lending provides a flexible and borrower friendly financial atmosphere, every loan company gives priority to a financially responsible person.
- Regular income that is not dominated by obligations
Having a regular income is necessary to avail of any loan, but that alone is not enough. If your current obligations, such as pending loans and credit card payments, exceed the capacity of your monthly income, approval is difficult. But you already know this basic rule, right? You can definitely manage things a little bit while applying.
Therefore, along with having a regular income, your current obligations should be under control. There should be a possibility in your personal finances to pay the installment of a new personal loan.
- A Credit score is not prime but a significant factor
In the liberal culture of online lending, credit score is not the only important factor. However, it is significant in attaining funds. If you have a good credit score, then there is no need to worry anyway.
What if you have a poor credit score? Well, in that case, you can get bad credit loans. But remember, in that case, your financial history of the past 6 months plays a decisive part. If your records show you are paying your bills and obligations on time, you will also get instant approval.
- Work experience
Borrowers who have at least 2 to 3 years of experience in their career get loans easily. On the other hand, those who have just started their career are considered risky borrowers by loan companies. Borrowers with long work experience have relatively more savings and financial strength.
However, it is important to note here that not every direct lender is like this. Zeolitefunds focus on current repayment capacity. Financial affairs are always volatile.
Even after working for years, people may have fractured finances. They may have issues like credit scores or pending obligations. Therefore, biased thinking based on employment duration should not be the base of rejection.
What Documents do You Need to Submit for Small Personal Loans?
We can categorize the documents into two categories. One is the documents needed for the salaried, and the other one is for the self-employed. The table below will give you an insight into it.
| Salaried | Self-employed |
| Online application with a picture | Online application with a picture |
| Income proof | Monthly turnover proof |
| 6 month bank statement | 6 month business transaction record |
| Identity proof for address verification | Income tax return of last 3 years |
| Address of the current employer | Profit and loss statement for the last three years. |
What are the Pitfalls For a Personal Loan Bearer?
If you have taken a loan, you should also take care of the repayment part. Many people forget about the repayment of loans as easily as they take them.
In such a situation, small personal loans become a debt burden instead of a helping tool. Let us know the special aspects that you should take care of as a personal loan taker. If you don’t pay attention, you will miss the pitfalls.
- Take only the required amount – Because personal loans are easily available, many times, you end up borrowing more money than you need. It is very important that before taking a loan, you assess your needs and take only the amount you need from the lender.
- Capacity to pay a minimum instalment is basic – Your financial situation should be at least able to pay the minimum installment offered on a personal loan deal. If you cannot pay even the smallest amount of installment, you are getting into chaos that can derail your finances.
- Take care of credit mix – Credit Mix means the more different types of financial products your financial records show, the stronger your financial background is considered to be. While taking a personal loan, you should take care that only personal loans should not appear in your record. It is very important to have a proper combination of financial products like credit cards, mutual funds, loans, etc. Otherwise, you may not get a favorable personal loan deal.
- Borrow for a real need and not desire – Nowadays, online loans are so easily available that the money reaches your account within a few minutes. Many people take personal loans to go on vacations every now and then. It would be better if you borrow the funds only when there is either a medical emergency, educational expense, or any other urgent matter.
Conclusion
From the above information, you can understand why small personal loans have become an important part of the lives of Americans. Besides, you are now clear about the terms and conditions for getting it.
If you need instant funds, fill out the online application form for Zeolitefunds today. Get the money in your account within 24 hours. No matter what your credit score is, as long as you can pay the loan installments, you will definitely get the loan approval.
For over 5 years, Alex Thomas has been working as a noteworthy content writer at Zeolitefunds. After graduating in Economics, he started working in the finance sector. His interest in loans has encouraged him to explore extensively. His write-ups in the form of blogs and articles have shown his exceptional knowledge. Alex’s work is a product of his hard-core research and writing expertise.