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Best Small Personal Loans Under $5,000
BEST FOR FAST FUNDING & BELOW-AVERAGE CREDIT
LendingPoint
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
600
APR range
7.99% to 35.99%
with autopay
Loan amounts
$2,000 to $36,500
Via Fiona.com’s Website
600
7.99% to 35.99%
with autopay
$2,000 to $36,500
Why We Picked It
LendingPoint is an online lender based in Atlanta that offers personal loans to prospective borrowers in 48 states and Washington D.C.; it does not offer loans in Nevada and West Virginia. Prospective borrowers in eligible states can apply online and benefit from quick funding.
LendingPoint personal loans range from $2,000 to $36,500; Georgia loans have a minimum loan amount of $3,500. Repayment terms range from 24 to 72 months—or two to six years.
There are two main disadvantages to LendingPoint: high maximum APRs and origination fees. While you can typically avoid high APRs by maintaining a high credit score, LendingPoint origination fees (up to 10%) depend on the state you live in.
Pros & Cons
- Quick funding
- Low credit score requirements
- No prepayment penalty
- Origination fee up to 10%
- Co-signers or joint loans not permitted
- Not available in Nevada and West Virginia
Details
Overview: LendingPoint is an online lender based in Atlanta that offers personal loans to prospective borrowers in 48 states and Washington D.C.; it does not offer loans in Nevada and West Virginia. Prospective borrowers in eligible states can apply online and benefit from quick funding.
There are two main disadvantages to LendingPoint: high maximum APRs and origination fees. While you can typically avoid high APRs by maintaining a good credit score, LendingPoint origination fees (up to 10%) depend on the state you live in.
Eligibility:
- Minimum credit score: 600
- Must live in a state other than Nevada or West Virginia
- Doesn’t allow co-signers or co-applicants
Loan uses:
- Debt consolidation
- Home project
- Medical expenses
BEST FOR COMPARING MULTIPLE OFFERS
Universal Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
580
APR range
11.69% to 35.99%
Loan amounts
$1,000 to $50,000
Compare Rates
Via Credible.com’s Website
580
11.69% to 35.99%
$1,000 to $50,000
Why We Picked It
Universal Credit is an online lending platform that offers personal loans between $1,000 to $50,000 through its partners. Repayment terms range from three to seven years.
While Universal Credit makes finding a personal loan accessible even to those with damaged credit, it comes with a few tradeoffs. First, it charges high APRs, well above the most competitive rates seen on our list. Second, Universal Credit charges a 5.25% to 9.99% origination fee on all personal loans. Because this is deducted from your loan proceeds, you’ll need to factor this in when determining your loan amount to ensure you receive the necessary amount after the fact.
Pros & Cons
- Flexible qualification requirements
- Next-day funding
- No prepayment penalty
- High APRs
- All personal loans charge a 5.25% to 9.99% origination fee
Details
Overview: Universal Credit is an online lender powered by Upgrade with loans originated by partners Cross River Bank and Blue Ridge Bank. The lender offers its loans in every state except Iowa, West Virginia and Washington, D.C.
Eligibility:
- Minimum credit score: 580
- Minimum income requirement: Does not disclose
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Large expense
- Home project
BEST FOR NO INTEREST IF REPAID WITHIN 30 DAYS
Discover
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
660
APR range
7.99% to 24.99%
Loan amounts
$2,500 to $40,000
Learn More
Read Our Full Review
Why We Picked It
Discover is an online bank that also offers customers credit cards, retirement solutions and personal loans in all 50 states. As a lending platform, Discover stands out because of its online application and mobile banking tools, well-reviewed customer support team and quick funding.
In general, loans are available from $2,500 to $40,000 and may be issued for between three and seven years. So, while borrowers may get a larger loan from another lender, the repayment terms are fairly flexible. Discover charges a late payment fee and does not offer an autopay discount; however, it does not charge any origination fees or prepayment penalties, making it competitive with other top personal loan providers.
Pros & Cons
- Option to pay off creditors directly
- No origination fees or prepayment penalties
- Directly pays creditors
- Charges late fees
- Low maximum loan amount
Details
Overview: Discover is an online bank that also offers customers credit cards, retirement solutions and personal loans in all 50 states. Discover charges a late payment fee and does not offer an autopay discount; however, it does not charge any origination fees or prepayment penalties, making it competitive with other top personal loan providers.
Eligibility:
- Minimum credit score: 660
- Minimum household income: $25,000
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Medical bills
- Business expenses
- Home renovation
BEST FOR BAD CREDIT
Upgrade
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
580
APR range
8.49% to 35.99%
Loan amounts
$1,000 to $50,000
Via Credible.com’s Website
580
8.49% to 35.99%
$1,000 to $50,000
Why We Picked It
Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services. Although maximum APRs are on the high end compared to other online lenders, Upgrade makes loans available to those with poor credit history.
Loans amounts, which range from $1,000 to $50,000. Upgrade has two- to seven-yearterms available. Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Pros & Cons
- Low minimum credit score requirement
- Borrowers can use loans to cover business expenses
- Offers direct lender payoff for debt consolidation loans
- High APR range
- Charges fees for origination, late payment and insufficient funds
Details
Overview: Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services.
Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Eligibility:
- Minimum credit score: 580
- No minimum income requirement
- Allows co-applicants
Loan uses:
- Debt consolidation
- Home projects
- Large expenses
- Business expenses
BEST FOR FAIR CREDIT
Upstart
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
300
APR range
7.80% to 35.99%
Loan amounts
$1,000 to $50,000
Via Credible.com’s Website
300
7.80% to 35.99%
$1,000 to $50,000
Why We Picked It
Upstart has made a mark on the personal loan space because of its artificial intelligence- and machine learning-based approach to borrower qualification. In fact, Upstart estimates that it has been able to approve 27% more borrowers than possible under a traditional lending model. With competitive APRs, Upstart is not a top lender for borrowers who can qualify for more competitive rates. Even so, the platform’s minimum 300 credit score makes it an accessible option to those with fair credit.
Upstart also offers a pretty flexible range of loan options, with amounts ranging from $1,000 to $50,000 so you don’t have to borrow (or pay interest on) more than you really need. And, while Upstart’s loan cap is lower than some lenders—this is likely to be enough for many prospective borrowers.
Even though Upstarts three-, five-, seven-year loan terms are more restrictive than other lenders, it’s likely to be an acceptable tradeoff for applicants who might not be approved in a more traditional lending environment. Plus, it’s available in every state except West Virginia and Iowa, so it’s as widely available as many other top lenders.
Pros & Cons
- Accessible to borrowers with fair credit
- Offers prequalification with a soft credit check
- Ability to choose a custom payment date
- Charges an origination fee up to 8% of the loan amount
- No secured or co-signer option
- Loans only available for three-, five-, seven-year terms
Details
Overview: Upstart has made a mark on the personal loan space because of its artificial intelligence- and machine learning-based approach to borrower qualification. In fact, Upstart estimates that it has been able to approve 27% more borrowers than possible under a traditional lending model.
Even though Upstart’s three-, five-, seven-year loan terms are more restrictive than other lenders, it’s likely to be an acceptable tradeoff for applicants who might not be approved in a more traditional lending environment. Plus, it’s available in every state except West Virginia and Iowa, so it’s as widely available as many other top lenders.
Eligibility:
- Minimum credit score: 300
- Minimum income requirement: $12,000
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Medical expenses
- Educational expenses
BEST FOR A RANGE OF PAYMENT OPTIONS
Avant
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
580
APR range
If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
9.95% to 35.99%
Loan amounts
Example: A $5,900 loan with an administration fee of 4.75% and an amount financed of $5,619.75, repayable in 36 monthly installments, with an APR of 29.95% would have monthly payments of $250.30. If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
$2,000 to $35,000
Via Credible.com’s Website
580
If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
9.95% to 35.99%
Example: A $5,900 loan with an administration fee of 4.75% and an amount financed of $5,619.75, repayable in 36 monthly installments, with an APR of 29.95% would have monthly payments of $250.30. If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
$2,000 to $35,000
Why We Picked It
Founded in 2012 and based in Chicago, Avant is a consumer lending platform that offers secured and unsecured personal loans through a third-party bank (WebBank). Unsecured loans are available in Washington, D.C. and every state but Hawaii, Iowa, New York, Vermont, West Virginia and Maine. The platform specializes in middle-income borrowers with fair to good credit and only requires a minimum score of 580 to qualify.
Maximum loan amounts are low compared to other lenders, but the low minimum amount and flexible repayment terms (two to five years) make it an accessible option for borrowers. However, as with many loans for subprime borrowers, Avant personal loans come with a price. In addition to charging an administrative fee of up to 4.75%of the loan amount, Avant’s APR range (9.95% to 35.99%) is on the high end for applicants with a good to excellent credit score—and there is no autopay discount. Still, the platform earns top marks for borrowers with less than stellar credit who need quick access to funds.
Pros & Cons
- Secured and unsecured loan options available
- Low credit score requirement (580)
- Loan terms available up to 60 months
- Charges an upfront administrative fee
- High starting APR for prime borrowers
- Co-signers and co-applicants not allowed
Details
Overview: Founded in 2012 and based in Chicago, Avant is a consumer lending platform that offers secured and unsecured personal loans through a third-party bank (WebBank). Unsecured loans are available in Washington, D.C. and every state but Hawaii, Iowa, New York, Vermont, West Virginia and Maine. The platform specializes in middle-income borrowers with fair to good credit and only requires a minimum score of 580 to qualify.
Eligibility:
- Minimum credit score: 580
- Minimum income: $20,000
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Large expenses
- Home projects
BEST FOR LOANS UNDER $1,000
PenFed
3.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
650
APR range
8.49% to 17.99%
Loan amounts
$600 to $50,000
Learn More
Via Fiona.com’s Website
650
8.49% to 17.99%
$600 to $50,000
Why We Picked It
Although PenFed was originally created to serve U.S. military members and veterans, in addition to federal employees and retirees, it has expanded its membership to non-military members. PenFed has several federal partners, including the American Society of Military Comptrollers, Coast Guard Auxiliary Association, Navy League of the United States and United States Army Warrant Officers Association.
PenFed offers fixed-rate, low-interest loans that start $600 to $50,000. If you’re looking for a mix of low interest rates and high loan limits, PenFed may not be the choice for you; look toward LightStream for higher limits.
PenFed personal loans carry rates from 8.49% to 17.99%, based on your application and credit information. Applicants with higher credit scores can typically snag the lowest rates. What’s more, PenFed also boasts no title or deed requirements, no early payoff penalty and no origination or hidden fees. Although PenFed is located on the East Coast, borrowers will have around-the-clock access to their accounts through the PenFed mobile app.
Anyone can apply for a loan through PenFed; however, if you’re approved and choose to move forward with your loan, you’ll need to become a member of the credit union. Becoming a member is easy, and it typically only takes a few minutes. While the membership is free, you’ll need to make a deposit of at least $5 into a new PenFed savings account.
Pros & Cons
- No origination or hidden fees
- Funds could be available the next day
- Few qualification requirements
- Branches only located on the East Coast
- Must open a PenFed savings account to become a member
Details
Overview: Although PenFed was originally created to serve U.S. military members and veterans, in addition to federal employees and retirees, it has expanded its membership to non-military members. PenFed has several federal partners, including the American Society of Military Comptrollers, Coast Guard Auxiliary Association, Navy League of the United States and United States Army Warrant Officers Association.
Although PenFed is located on the East Coast, borrowers will have around-the-clock access to their accounts through the PenFed mobile app. Anyone can apply for a loan through PenFed; however, if you’re approved and choose to move forward with your loan, you’ll need to become a member of the credit union. Becoming a member is easy, and it typically only takes a few minutes. While the membership is free, you’ll need to make a deposit of at least $5 into a new PenFed savings account.
Eligibility:
- Be a PenFed member
- Minimum credit score: 650
- Can apply with a co-borrower
Loan uses:
- Debt consolidation
- Home project
- Medical expenses
Best Small Personal Loans Starting at $5,000
BEST FOR COMPETITIVE FEES AND LOAN AMOUNTS
SoFi®
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
650
APR range
8.99% to 29.99%
with autopay
Loan amounts
$5,000 to $100,000
Via Credible.com’s Website
650
8.99% to 29.99%
with autopay
$5,000 to $100,000
Why We Picked It
SoFi is an online lending platform that offers unsecured fixed-rate personal loans in every state. Founded in 2011, SoFi has extended over $50 billion in loans and stands out for allowing high loan amounts and its availability of extended loan terms.
Loans are available from $5,000 to $100,000, making SoFi a great option for those with excellent credit who need to borrow a large amount of money. Loan amounts available may vary by the state you live in. Repayment terms range from two to seven years, making SoFi an incredibly flexible option for those with sufficient credit (minimum 650) and annual income (at least $45,000). SoFi also lets prospective borrowers submit joint applications—although co-signers are not permitted.
Approved borrowers are rewarded with comparatively low APRs. What’s more, SoFi doesn’t charge origination fees, late fees or prepayment penalties—a stand-out feature because personal loan lenders often charge origination or late payment fees at a minimum.
However, if you’re considering a debt consolidating loan from SoFi, keep in mind that the lender does not offer direct payment to a borrower’s other creditors. This means the loan proceeds will be deposited to your bank account and you’ll have to pay off your other lenders individually. The platform does offer customers a number of other perks and discounts, including unemployment protection and the ability to change their payment due date once a year.
Pros & Cons
- Prequalification with soft credit check
- Funding in as little as one to two days
- High loan amounts and lengthy terms
- Does not offer direct payment to third-party creditors for debt consolidation
- Some applicants report difficult qualification standards
- Co-signers are not permitted
Details
Overview: Founded in 2011, SoFi is an online lending platform that offers unsecured fixed-rate personal loans in every state, extending over $50 billion in loans. SoFi offers comparatively low APRs and doesn’t charge origination fees, late fees or prepayment penalties—a stand-out feature because personal loan lenders often charge origination or late payment fees at a minimum.
However, if you’re considering a debt consolidating loan from SoFi, keep in mind that the lender does not offer direct payment to a borrower’s other creditors. This means the loan proceeds will be deposited to your bank account and you’ll have to pay off your other lenders individually.
Eligibility:
- Minimum credit score required: 650
- Minimum annual income: $45,000
- Co-signers not permitted
Loan uses:
- Medical expenses
- Credit card consolidation
- Home projects
- Moving costs
BEST FOR LOW INTEREST RATES
LightStream
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
660
APR range
7.49% to 25.49%
with autopay
Loan amounts
$5,000 to $100,000
Via Credible.com’s Website
660
7.49% to 25.49%
with autopay
$5,000 to $100,000
Why We Picked It
LightStreamoffers loans with both a low minimum and maximum interest rate, along with a rate-beat program. LightStream’s unsecured personal loans range from $5,000 to $100,000 with loan amounts varying based on the loan purpose. In addition to offering appealing and flexible terms, LightStream charges no origination, late payment or prepayment fees. The lender also offers a 0.50% rate discount for borrowers who enroll in autopay.
Pros & Cons
- No origination, prepayment or late fees
- Low, competitive rates
- Fast approval and funding
- No prequalification process
- No due date flexibility
- Limitations on use of loan proceeds
Details
Overview: LightStream is a consumer lending division of Truist—which formed following the merger of SunTrust Bank and BB&T. The platform offers unsecured personal loans from $5,000 to $100,000. Loan amounts vary based on the loan purpose. Although a number of lenders offer smaller loans than the LightStream minimum, few lenders offer a higher maximum loan. Repayment terms are available from two to seven years.
LightStream offers loans in all 50 states plus Washington, D.C., and applicants can contact the lender’s customer support team seven days a week; current borrowers have access to customer support from Monday through Saturday. While LightStream doesn’t offer a mobile app for loan management, customers can access their account through LightStream.com.
Eligibility:
- Applicants should have several years of credit history
- Minimum credit score: 660
- Can’t prequalify
Loan uses:
- Large expenses
- Finance land, timeshares and tiny homes
- Home project
Summary: Best Small Personal Loans of March 2024
| Company | Company - Logo | Forbes Advisor Rating | Forbes Advisor Rating | Minimum credit score | APR range | Loan amounts | Learn More CTA text | Learn more CTA below text | Learn More |
|---|---|---|---|---|---|---|---|---|---|
| LendingPoint |  | 4.0 |  | 600 | 7.99% to 35.99% | $2,000 to $36,500 | Compare Rates | Via Fiona.com’s Website | |
| Universal Credit |  | 4.0 | | 580 | 11.69% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com’s Website | |
| Discover |  | 3.5 |  | 660 | 7.99% to 24.99% | $2,500 to $40,000 | Compare Rates | Via Fiona.com’s Website | |
| Upgrade |  | 3.5 | | 580 | 8.49% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com's Website | |
| Upstart |  | 3.5 | | 300 | 7.80% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com's Website | |
| Avant |  | 3.5 | | 580 | 9.95% to 35.99% | $2,000 to $35,000 | Compare Rates | Via Credible.com's Website | |
| PenFed |  | 3.5 | | 650 | 8.49% to 17.99% | $600 to $50,000 | Compare Rates | Via Fiona.com’s Website | |
| SoFi® |  | 4.0 | | 650 | 8.99% to 29.99% | $5,000 to $100,000 | Compare Rates | Via Credible.com's Website | |
| LightStream |  | 3.5 | | 660 | 7.49% to 25.49% | $5,000 to $100,000 | Compare Rates | Via Credible.com's Website |
Methodology
We reviewed 29 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 35%
- Loan details: 20%
- Eligibility and accessibility: 20%
- Customer experience: 15%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our .
Tips for Comparing Small Personal Loans
Consider these tips when comparing small personal loans:
- Check your credit score. Before comparing small personal loans, check your credit score through your credit card provider or another free credit scoring website. Understanding your credit profile can provide insight into your approval odds and the interest rate you’re likely to qualify for from each lender.
- Evaluate your budget. In addition to determining how much you need to borrow, review your budget to see how much you can afford in monthly payments. Then, narrow lenders to those that offer borrowing limits in line with your needs.
- Take advantage of prequalification. Many online lenders let prospective borrowers prequalify for a loan without a hard credit inquiry. This makes it possible to see what annual percentage rate (APR) you’ll qualify for at various lenders without impacting your credit score.
- Evaluate the lender’s customer support options. While customer support may not seem like a big deal in the honeymoon phase of your loan, it can make a huge difference if you encounter issues with payments or face a financial hardship during your repayment period. Review the lender’s customer service resources and read reviews from past and current borrowers to make sure it’s a good fit.
What Is a Small Personal Loan?
A personal loan is an installment loan that you may borrow from a bank, credit union or online lender. Funds can be used for just about anything; however, some lenders prohibit using funds for business purposes. The definition of a small personal loan varies depending on both the lender and the borrower’s interpretation of the loan amount. In general, though, small personal loans typically have minimum loan amounts between a few hundred to a few thousand dollars.
Pros and Cons of Small Personal Loans
Before you take out a small personal loan, consider all the benefits and downsides, especially for your own finances.
Pros of Small Personal Loans
- May be easier to qualify for
- May come with lower interest rates
- Smaller monthly payments compared to larger loans
- Can help build credit if you make all payments on time
Cons of Small Personal Loans
- May be harder to find a lender
- May be limited to shorter term lengths
- Can damage your credit if you miss any payments
Best Place To Get a Small Personal Loan
Lenders set a number of different standards or rules when they decide to offer loans to the public. One of these standards is a minimum loan amount.
Some lenders decide against offering small personal loans and instead start loan amounts at $5,000 or more. So if you’re looking to borrow a smaller amount of money for an unexpected expense, you may need to do a little more research.
Here are three types of lenders that may offer small personal loans.
Online Lenders
Online lenders are a common resource to consider if you need a small personal loan. Loan options vary, of course, but you may be able to find minimum loan amounts starting between $1,000 to $2,000.
Borrowing from an online lender can often be a quicker process than through a traditional bank or credit union. So if you need to access cash in a hurry, this might be a good option for you.
You may also find bad credit loan options from online lenders if your credit is damaged. Just know that borrowing costs (interest and fees) tend to be higher in these situations than they would if you had a good credit score.
Banks
Banks are another place you may be able to get small personal loans when you need them. And if you’re looking to borrow less than $1,000, you might be able to find more options to suit your needs than with online lenders. Before researching traditional banks, though, start by checking with your current personal bank to see what it offers.
Regardless of if you go through your current bank or a new one, note that the application process is typically more time-consuming compared to online lenders. Some online lenders offer funding within one to two business days.
Credit Unions
Credit unions also provide small personal loans as low as $250. However, with credit unions, there’s a catch-22: most require membership and typically only offer memberships to people of certain communities. This means your options for credit unions are slim compared to traditional banks and online lenders. But if you need a loan of only a couple hundred dollars and have a trusted credit union in your community, it may be worth considering.
Note: While most credit unions require you to live within their community, there are some national credit unions that allow you to become a member with small donations to certain organizations or through other easy-to-meet criteria.
How To Get a Small Personal Loan
The process for each lender can vary, but these are the typical steps to apply for a small personal loan:
1. Check your credit. First, check your credit so you know your credit score and history. If there are any errors, contact the credit bureau to correct them. Knowing your credit score will give you an idea of the loans you can qualify for; a score of at least 610 will give you your best odds of qualifying for a loan, but a score of 720 will likely qualify you for the most favorable rates.
2. Determine your loan amount. Before applying, determine how much money you’ll need to cover your expenses—and what you can afford to repay. This will help you determine which lenders to consider and which options fit into your budget.
3. Prequalify with several different lenders. Prequalifying with lenders can give you an idea of the offers you may qualify for without impacting your credit score. Compare your loan offers to find the loan that best meets your needs.
4. Submit a formal application. Once you’ve determined which loan works best for you, gather all of the necessary information and documents and submit a formal application. Once approved, the funds can be dispersed in as soon as a few hours or in the following days, depending on the lender.
How to Get a Small Personal Loan With Bad Credit
Applying with a co-signer could help you qualify for a personal loan with bad credit. A co-signer is someone who’s also responsible for your debt if you default. Their credit is checked along with yours when the lender runs the application and can also be affected if you miss payments. Because of this, t’s important to explain the repercussions of nonpayment to the co-signer and be sure you can pay back the loan before asking them for the favor.
If you don’t have someone who can co-sign on your loan, some lenders are willing to work with borrowers who have bad credit. Taking steps to improve your credit before borrowing, like reducing your credit utilization, could help increase your approval odds and lower your interest rate.
Be sure to watch out for predatory loans marketed as bad credit loans. For example, it’s best to avoid small payday loans, even as a last resort. Payday loans can have fees that work out to an APR of over 300%, making them difficult to pay back. Some credit unions offer payday alternative loans (PALs) for small amounts of up to $2,000 with lower rates and fees, which could be a better option if you need to borrow a small sum.
How To Spot a Predatory Small Loan
Predatory loans are a common fallback for those who need small personal loans. With little or no qualification requirements and exorbitant fees, predatory loans can lead to a cycle of debt that can be challenging to escape.
Before taking out a loan, look for these predatory lending features:
- High interest rates. Predatory lenders often charge excessively high interest rates while under the guise of offering loans to individuals with poor credit scores. Typical personal loans will charge interest rates of 36% or less.
- Hidden fees and penalties. Unusually high fees or penalties hidden in the fine print can also signify a predatory loan. These might include origination fees, prepayment penalties or inflated late payment charges. Always ensure you understand all potential fees before signing any loan agreement.
- Aggressive sales tactics. Predatory lenders might try to pressure you into signing a loan agreement without fully understanding the terms. It’s crucial to take your time and never let a lender pressure you into making a quick decision.
- Lack of transparency. Legitimate lenders are transparent about their terms and conditions. If a lender is not clear about the terms of the loan or if it discourages you from reading the fine print, this is a major red flag.
- No credit check required. While it may seem like a benefit initially, lenders that don’t perform a credit check may be predatory. Legitimate lenders need to assess your ability to repay the loan, and a credit check is a standard part of this process.
- Balloon payments. These are large, lump-sum payments due at the loan term’s end. While they might make the loan seem affordable initially, they can cause significant financial hardship when the loan is due.
Alternatives To Small Loans
Taking out a small personal loan can be helpful to people who need fast access to cash for unforeseen expenses. But they’re not the only resource you can use in an emergency situation. If a small personal loan doesn’t seem right for you, consider an alternative.
Credit Cards
A credit card can be one of the fastest ways to access cash in a crunch, especially if you already have an open account with available credit. However, with the average credit card interest rate sitting at nearly 16.5%, according to Federal Reserve data, this also can be an expensive way to borrow.
There are two potential ways to use a credit card in an emergency situation without paying high interest:
- Take advantage of your credit card’s grace period. If you know that you will have access to enough money to pay off your credit card balance by the time your statement due date arrives, you may be able to take advantage of your credit card’s grace period. As long as you can repay the full statement balance by the due date, a credit card can be a short-term, interest-free borrowing solution.
- Open a credit card with an introductory APR offer. Some credit cards may feature a 0% APR offer for a limited time when you open a new account. But if you opt to use a 0% APR credit card to cover an emergency expense, it’s important to have a plan to pay off the debt before the introductory period ends or else interest will begin to accrue. Zero interest credit cards are typically reserved for highly qualified borrowers.
Friends and Family
Borrowing money from loved ones can be another way to access the cash you need when you’re in a financial crunch. According to the Consumer Financial Protection Bureau (CFPB), one in five adults in the U.S. receive financial support from loved ones.
However, loans from friends and family come with a unique set of risks. Missed payments or lingering debt between loved ones could lead to hurt feelings, damaged relationships and resentment. You could also put someone you care about in a financial bind if something goes wrong and you’re unable to repay as promised.
If you plan to ask for a loan from a friend or family member, it’s important to be clear on the arrangement from the beginning. Make a detailed plan that includes the size of your payments, when you’ll make them and what happens if you can’t give your loved one a payment as scheduled. You can use the free worksheet from the CFPB to manage the repayment process.
Nonprofit Organizations
Depending on your financial situation, you might be able to get help from a nonprofit organization. Some nonprofits offer financial relief grants or other forms of assistance to individuals in need of:
- Funds to prevent eviction or foreclosure
- Money for medical or prescription expenses
- Temporary housing
- Utility bill coverage
- Food
If you’re searching for financial assistance, a good place to start is GivingCompass.org. The website features a list of 545 vetted organizations where you can seek assistance or donate. Your local community center, library, food bank or place of worship might also offer help or guidance in this area.
Buy Now, Pay Later Apps
Buy Now, Pay Later (BNPL) apps are digital platforms that allow consumers to purchase an item immediately but defer the payment to a later date, usually in installments. These apps include Afterpay, Klarna and Affirm.
BNPL apps can be a viable alternative to small loans because they typically offer fast approval and don’t require a credit check, making them accessible to a broader range of consumers. They also offer zero-interest installment plans, reducing the overall financial burden.
Consider a Buy Now, Pay Later app if you need to make a large or urgent purchase but don’t have sufficient funds readily available. Keep in mind, though, that they require discipline to avoid overspending and ensure timely repayments to avoid late fees or negative impacts on your credit score.
Find the Best Personal Loans of 2024
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Recap: Best Small Loans
- LendingPoint. Offers quick funding with low minimum credit score requirements and no prepayment penalty.
- Universal Credit. This lender offers a wide range of loan amounts with quick turnaround times and flexible qualification requirements.
- Discover. Offers personal loans with no origination fees or prepayment penalties, and the option to directly pay off creditors.
- Upgrade. These personal loans have low minimum credit score requirements and they can be used to cover business expenses.
- Upstart. This lender offers low interest rates and a range of loan amounts.
- Avant. Offers both secured and unsecured loans with loan terms of up to 60 months.
- PenFed. There are no origination or hidden fees with this lender, and there are few qualification requirements.
- SoFi. Offers loan amounts that are much higher than competitors along with lengthy terms.
- Lightstream. This lender offers no origination, prepayment or late fees along with fast funding times.
Is getting a small personal loan worth it?
If you’ve considered other alternatives like opening a no-interest credit card or reaching out for community-based financial support, then a small personal loan may be a good idea. Just be sure that the payments can fit into your budget.
What is the smallest personal loan you can get?
Each lender sets its own minimum loan amount. The smallest personal loan you can get will depend on the lender you use. Some lenders offer small personal loans as small as a few hundred dollars. Others may only offer loans of several thousand dollars and up.
How do I borrow a small amount of money?
There are numerous ways to borrow small amounts of money. Online lenders tend to offer the fastest funding, but the minimum loan amounts available may sometimes be more money than you need.
Credit unions and some banks may also offer smaller loans to qualified borrowers. Your best bet is to shop around until you find a funding source that’s the right fit for your situation.
Can you get a loan for less than $1,000?
It is possible to secure a loan for less than $1,000. However, your options may be more limited when you’re seeking loans of this amount. That doesn’t mean you won’t be able to find financing options, but you may have to do a little more research to find small-dollar lenders with affordable interest rates.
It is important to note that you should try toavoid payday loansif possible. These loans can feature exorbitant fees equivalent to APRs of 400%. Thankfully, there are numerousalternative borrowing optionsto consider.
How do you get a small personal loan with no credit?
You may be able to get a loan with no credit by borrowing from lenders that have flexible eligibility requirements or requireno credit check. However, these loans tend to have higher interest rates. If you know someone with good credit who could co-sign for you, applying for a small loan with a co-signer could help you qualify for a more competitive interest rate.
Does getting a small personal loan hurt your credit?
Applying for a small personal loan may temporarily cause a score drop of up to five points if the lender does a hard credit check during the application process. However, your score should rebound fairly quickly as long as you pay your loan on time. If you don’t pay on time, bad payment history could negatively affect your score.
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