Looking to take out a small loan of $10,000 or less? Like many businesses, the loan industry is going online, making loans easier to get and quicker to process. There are also a number of significant advantages to taking out an online loan.
Interest
According to the Credit Counselling Society, personal loans from online lenders can be repaid in small bi-weekly or monthly payments. Some other lenders require you to repay the full principal on the loan, as well as interest and fees, in some cases.
Although a credit card advance may seem like a useful option for a small loan, the interest rates charged by credit card companies will be high, usually between 21.99% to 24.99%, according to Ratehub.ca. Note also that the interest charges begin on the same day you use your card to obtain the loan.
The Debt Cycle
Even though cash loans in Canada have to be repaid eventually, consumers often use the minimum payment option on their credit card bill. This choice can leave you deeper in debt, with no way to pay back even the smallest loan. Because of high fees and interest rates, it’s easy to get caught in a cycle where you use cash advances from one credit card to repay another. It’s a dangerous financial practice and can easily turn into a vicious circle.
Poor Financial Habits
It’s convenient to get a cash advance, but the downside with getting easy cash is that it’s a temporary fix to a long-term financial problem. Until you can remedy the underlying problem, getting credit card loans will only strengthen unhealthy saving and spending habits, which could cause even more financial troubles in the future.
What’s The Alternative
Other options for loans include a bank line of credit, the aforementioned credit card advance or an online lender offering reasonable interest rates for small loans of up to $10,000. For example, SkyCap Financial, founded in 2013 and based in Kingston, Ontario, offers alternative financing for Canadians. SkyCap Financial strives to create a better lending experience, recognizing that people sometimes fall into challenging financial situations that are no fault of their own and can impact their credit in a negative way.
Although taking out a loan is never a fun process, Canada’s new crop of online lenders is focused on making the procedure as painless as possible. Being online means your loan can often be approved quickly and the money deposited directly into your account, sometimes within 24 hours.
