Small Personal Loans
How to get cash when you don't need too much
Lenders don't like small personal loans, because the amount of interest payable on small amounts isn't worth the paperwork. The less you borrow, the higher the interest rate – and if you want to borrow less than £1,000, you'll have to consider alternative forms of borrowing.
Small personal loans are bad news for lenders, because they don't make much money in interest payments. Loans of less than £5,000 attract higher interest rates, and loans of less than £3,000 are the most expensive of the lot; in most cases, mainstream lenders won't consider small personal loans of less than £1,000.
If you need to borrow less than £1,000 – for a holiday, or some new computer equipment – then there are a number of options. If you can repay the money quickly then it might be worth asking your bank to extend your overdraft, or you could use a credit card. You'll get a better interest rate if your credit card has a high borrowing limit, although of course you'll need to resist the temptation to go mad and run the card up to its limit.
Another alternative to small personal loans is to apply for finance, which is widely available from electrical retailers, online shops and computer firms. Check interest rates closely: in many cases it will be cheaper to pay with a credit card than to use a store card or the retailers' own finance scheme.
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