Best Small Personal Loans for March 2024 (2024)

70

Lenders reviewed

31

Loan features considered

1,680

Data points analyzed

173

Primary data sources used

Investopedia's Rating

Investopedia's Rating

Investopedia's Rating

Investopedia's Rating

Investopedia's Rating

Best Big Bank :U.S. Bank

Best for Military Members :Navy Federal Credit Union

Compare the Best Small Personal Loans for March 2024

*APR ranges for some companies include a discount for automatic payments or existing bank customers.

The Bottom Line

Lake Michigan Credit Union offers the the smallest minimum loan amount in our collection, but other lenders make a strong case if you need to borrow more than $250. Patelco Credit Union, our top rated credit union lender overall, will fund loans as small as $300, at competitive rates. And if the lowest rates are a priority, PenFed is a good choice.

There's no one right lender for everyone. Whether you have bad credit, need a very small or very large loan, or want a secured loan, there’s a lender on our list that can fit your needs.

Guide to Choosing the Best Small Personal Loan

What Are Small Personal Loans?

Small personal loans are usually valued at $5,000 or less—some as low as $250. These loans are generally unsecured, which means they don't require collateral. Borrowers can get small personal loans from banks, credit unions, other financial institutions, and online lenders. They can be used for emergencies, vacations, paying bills, or other reasons.

Where Do You Get a Small Personal Loan?

You can get a small personal loan from any type of lender, including traditional banks, credit unions, and online lenders. There’s not necessarily one best place to get a small loan. However, based on our research, credit unions are more likely than other lenders to offer loans of less than $1,000. They also often don’t charge origination fees, which online lenders are more likely to do.

Should You Apply for a Small Personal Loan?

Whether a small personal loan is right for you depends on why you’re considering a loan. A small personal loan might be a good idea if you need cash to make a large purchase or get through a financial rough patch but don’t have access to other credit.

Depending on your situation, you may be better off saving up for your purchase or using alternative financing already at your disposal—a 0% APR credit card, for example. However, if you don’t qualify for a 0% APR offer, you’re likely to get a better interest rate on a personal loan versus a credit card.

Pros & Cons of Small Personal Loans

Small personal loans come with both advantages and disadvantages that are important to consider before applying for one.

Alternatives to a Small Personal Loan

Personal loans can be a good option for certain situations, but some alternatives may be better suited to your needs. Here are a few to consider:

• Credit card: If you have a credit card with a 0% introductory rate, that may be a better option. It can help you save money on interest. You’ll pay no interest at all if you repay the balance during the introductory period. Credit cards also don’t have origination fees, while many personal loans do.
• Save up for your purchase: If you’re considering a small personal loan to make a purchase, you may want to second-guess that choice. Instead of using a personal loan, which results in interest (and, often, origination fees), consider postponing your purchase until you can save up to pay for it in full.
• Tap your emergency fund: If you’re using a small personal loan to pay for a financial emergency, consider tapping your rainy day fund instead (if you have one). If you don’t have an emergency fund, start one now so you don’t have to borrow money when you have an emergency.
• Secured loan: Depending on the amount you need to borrow and what you plan to use it for, consider a secured loan like a home equity loan or home equity line of credit. These tools use your home equity as collateral, which can help you land a lower interest rate. However, you also put your home at risk of foreclosure if you can’t repay the loan.

Comparing Small Personal Loans

When you’re comparing small personal loan offers among lenders, here are a few factors to consider:

• Interest rate: The lower your interest rate, the more affordable your loan. While the interest rate isn’t the only factor to consider, it should be a top consideration.
• Fees: Other loan costs come in the form of fees, such as the origination fee that many lenders charge, which can add thousands to your loan costs.
• Loan amounts: Pay attention to each lender’s available loan amounts and choose one that offers the amount you need.
• Repayment terms: Terms can range from as little as six months to as much as seven years. Your repayment term can affect both your interest rate and monthly payment.
• Ease of application process: If you want an easy online application, make sure to choose a lender that offers that.
• Speed of funding: Some lenders provide loan funding as quickly as the same day, while others can take several days. Consider this if you need the money quickly.
• Reputation and customer service: Choose a lender that has a good reputation among customers and provides all the support you need.

How to Avoid Predatory Small Loans

It can be easy to fall victim to predatory loans like payday loans or cash advance loans when you're shopping around—especially if you need money fast or have poor credit.

Payday loans are small, generally $500 or less, and have repayment terms of two to four weeks. They seem attractive because they don’t require a credit check and offer same-day funding. But they are very predatory.

The biggest problem with payday loans is they have APRs as high as 400%. Combined with the short repayment terms, these high APRs make the loans difficult to repay. Borrowers often fall into a cycle where they must borrow another payday loan to repay the last one.

To avoid predatory small loans, pay close attention to the fine print regarding interest rates and fees. Most credible lenders don’t charge interest rates exceeding 36% or so. Additionally, legitimate personal loans have repayment terms lasting years, not weeks.

Finally, be wary of any lender offering guaranteed funding or personal loans with no credit check. If a personal loan doesn’t require a credit check to qualify, there’s a good chance it’s a payday loan.

How to Qualify for and Apply for a Small Personal Loan

There are several factors that lenders review before approving loan applications. Some lenders may weigh one factor heavier than another. Here are a few of the most common things that lenders consider from potential borrowers:

• Your Age:Lenders cannot discriminate based on age. However, some states require that borrowers meet minimum age requirements before they can enter a legal financial contract with a financial lender.
• Legal Residency:Just like age, lenders can't turn you down because of your national origin. They may ask you about your residency status to determine whether you can pay back the loan. Keep in mind that non-residents and non-citizens may still qualify, but it may be tougher to be approved.
• Income:Almost all lenders ask you for your income and employment information. This is to ensure that your source of income is enough to repay the loan. Some companies may have an income threshold before you can borrow.
• Debt-to-Income (DTI) Ratio:This ratio represents how much of your income goes to pay off your debts every month. As such, it helps lenders see how much of a risk you are if they approve you for a loan.
• Credit History and Score:The majority of lenders use your credit history and credit score to qualify you for a loan. Although these factors don't make or break the decision, they may also influence your loan terms, amount, and interest rate.
  

If you are considering applying for a small personal loan, here’s how to get started:

1. Pre-qualify: Most lenders allow you to pre-qualify for personal loans. Pre-qualification doesn’t require a hard credit check (meaning it doesn’t hurt your credit) and can give you an idea of whether you’ll qualify and at what interest rate.
2. Shop around for loans: It’s worth shopping around with a few different lenders to find the best loan offer for you. Choose a loan offer with a competitive interest rate and a monthly payment you can afford.
3. Complete your application: Once you choose a loan offer, you’ll need to complete the official application and provide additional details, such as proof of income and employment. The lender will review this information and give you a decision.
4. Accept your loan offer: Depending on your lender and the information you provide, you could get a loan offer immediately. Make sure you’re happy with the interest rate, and be sure to read the fine print before signing your loan documents.
5. Receive your loan funds: Depending on your lender, you could receive your loan funds as quickly as the same business day. Most personal loan lenders offer funding within no more than a few days.
6. Repay your loan: Once you receive your loan funding, you move into the repayment stage. You’ll have fixed monthly payments based on your loan amount, interest rate, and repayment term. Consider setting up autopay to ensure you never miss a payment.

Why You Should Trust Us

Investopedia collected and analyzed hundreds of key data points from over 70 companies across three months to identify the most important factors for readers choosing a fair loan lending company. We used this data to review each company for fees, repayment terms, income requirements, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best loans for those with fair credit since 2020.

How We Pick the Best Small Personal Loans

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more.

To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender in a survey we conducted. We grouped those factors into four broad areas:

• Loan costs (advertised APR, fees, and six other factors): 29.25%
• Loan terms (loan amount, repayment term, and three other factors): 22.25%
• Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
• Additional features (online application, pre-qualification, and eight other factors): 20%

Learn more about how we evaluated personal loans in our complete methodology.

Guide to Personal Loans

Learn more about personal loans:

• What is a personal loan?
• How do personal loans work?
• When are personal loans a good idea?
• How to get a personal loan
• How to apply for a personal loan
• How to use a personal loan
• Where to get a personal loan
• Personal loans vs credit cards
• Alternatives to personal loans
• Personal loan calculator
• Personal loans methodology

Erin Gobler is personal finance coach and a writer with over decade of experience. She specializes in writing about investing, cryptocurrency, stocks, and more. Her work has been published on major financial websites including Bankrate, Fox Business, Credit Karma, The Simple Dollar, and more.

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