Find a Good Short-term Loan

If you decide to look for a small loan, ask these basic questions when you shop around.  Remember, the best source of  a small loan is a bank or credit union.  Avoid payday loans, car title loans, refund anticipation loans, and overdraft loans.

1. What is the total amount of the loan, including the interest and fees?

2. What is the interest rate?  What is the annual percentage rate?

3. How much are the fees for getting the loan or product?

4. What is the loan term (how long will it take to repay)?

5. What are the penalties if the loan is not repaid in the time period?  Does the interest rate increase?  Are there additional fees?

6. How often will you make payments?  Can you fit them into your budget?

7. Are you paying for services or options that you don’t need?

8. Do you really need the money or product that badly, right now?  Small loans are expensive and can trap you in a cycle of debt.

9. If you’re shopping outside of a bank or credit union, ask what security is required to get a small loan.  Are you asked to write a check for the lender to hold, to sign over electronic access to your bank account, or to sign over the title to your car?  If you give security for a loan, you risk losing it and racking up extra fees if you are unable to repay on time.

For more tips about making ends meet and finding a good small loan, visit http://www.paydayloaninfo.org/consumer.asp, provided by the Consumer Federation of America.