Small loans, or “small dollar loans,” are personal loans that are issued in smaller amounts. These can range from a few thousand dollars, to even less than a thousand dollars. Many people seek small loans for temporary fixes for their budget, or for the emergency expenses. They can often be obtained in a short amount of time and may be subject to less rigorous approval steps. In response to the demand for such loans, many banks and other reputable institutions have begun issuing more competitive small dollar loans for consumers.
Small loans are different from “small business loans.” Small business loans can sometimes be worth a high amount, often several thousand dollars or tens of thousands of dollars. This is because small businesses often have greater expenditures and financial needs when compared to individual consumers.
What Are Some Characteristics of Small Loans?
Small loans are often marketed towards consumers with bad credit, financial hardships, and other similar backgrounds. As such, they are frequently advertised on radio stations, in phone books, and on the internet. Since the applicant for a small loan often has bad credit, there is a major risk that they might default on the loan payment. In order to counteract this, many lenders impose very high interest rates on their small loans. Some of them may also charge additional fees in order to insulate themselves from potential losses.
Many small loans are actually classified as payday loans or cash advance loans. These are loans that are paid back directly through the borrower’s next paycheck. This is often accomplished through Pay Pal or direct deposit. This means that the borrower may need to share their personal information and their bank account info with the lender. For this reason, borrowers should always be careful not to share their information with lenders who seem untrustworthy or for loan situations that might be fraudulent.
What If I Have a Dispute over a Small Dollar Loan?
Some common disputes over small dollar loans may include:
- Defaulting on the loan (i.e., failure to make the payments)
- Loan fraud
- Identity theft
- Violations of federal or state loan laws
- Tax-related violations
- Illegal marketing or advertising methods
Disputes over a small loan can sometimes result in a damages award for the non-liable party. In some cases, damages can accumulate to high amounts, especially if a violations causes loss of income, business losses, and other related damages. In order to protect against a violation, consumers are often advised to borrow from banks and other more established lending institutions as opposed to less-known sources online.
Do I Need a Lawyer for Help with a Small Loan?
Small loans can be helpful, but they are also associated with a number of specific legal issues. It may be in your best interests to hire a bankruptcy lawyer if you need assistance with a small loan. Your attorney can help research the laws in your area to determine what type of loans are most suitable for you. If you are involved in any legal disputes, or if you need to file a lawsuit, your lawyer can represent you with in court so that your interests are protected.