The following are the 5 reasons why taking very small loans may be very expensive for you
1. High Interest Rates
Many small loans, such as payday loans, come with high interest rates, which can make them very expensive to repay over time.
2. Short Repayment Terms
Many small loans have short repayment terms, which can make it difficult for borrowers to repay the loan in full before incurring additional fees or penalties.
3. Additional Fees
Many small loans come with additional fees, such as application fees or late fees, which can add to the overall cost of the loan.
4. Difficulty in paying off the Loan
Because of the high-interest rates and short repayment terms, it can be difficult for borrowers to pay off the loan, which can lead to a cycle of debt.
5. Damage to Credit Score
Failure to repay small loans on time can lead to damage to a borrower’s credit score, which can make it difficult to obtain loans or credit in the future.