How To Get A Small Personal Loan (2024)

Getting a small personal loan can be a simple and straightforward process, depending on your financial situation and the lender that best works for you.

The most important step to take to get a small personal loan will be finding the right one for you. Many different lenders offer small personal loans, including banks, credit unions and online lenders.

Before accepting a loan, consider all of your options and find the loan offer with the lowest possible interest rates and fees to lessen your borrowing costs.

What Are Small Personal Loans?

Small personal loans come in various amounts but generally are offered under $5,000. Although some lenders don’t offer personal loans less than that amount, many others do, including some that offer loans as small as $250.

These loans are often unsecured, meaning they aren’t backed by collateral. They’re also typically term loans, which means you’ll repay them with regular installments, typically on a monthly basis over a predetermined period.

Over that period, you’ll repay the loan with interest. In general, small personal loans come with lower interest rates and shorter terms than larger loans. The best small personal loans are often a cheaper option if you only need to borrow a small amount of money.

Where Can I Get a Small Personal Loan?

Many of the same lenders offering the best personal loans also offer small personal loans. Depending on your own needs, you may have to shop around to find the lender that offers the right loan for you.

Credit Unions

Credit unions are community-based lenders that offer a range of products, often including small personal loans. To get a small personal loan from a credit union, you’ll typically need to be a member; you can become a member based on where you live, where you work or other qualifications.

Credit unions are known to work with a range of borrowers, including those with limited or no credit history. Many credit unions offer payday alternative loans, which are loans up to $2,000 that are intended to be a lower-cost alternative to payday loans.

Banks

Some, but not all, banks offer small personal loans. Loans from banks often come with higher interest rates and fees than those from other lenders, but they can be a good option if you have an established relationship with one of these financial institutions.

Online Lenders

Online lenders are another option as you search for a small personal loan. These lenders don’t have any physical branches but often offer small personal loans with low interest rates and fees. With a wide range of online personal loan lenders, shopping around will help you find the right—and cheapest—option for you.

Cash Advance Apps

Cash advance apps are another option if you only need a small amount of cash, with some lenders offering loans of $250. Although these apps can give you quick access to money, they often have high interest rates and fees, so be sure to have a plan to repay your loan before taking on any debt.

How To Get a Small Personal Loan

Getting a small personal loan can be easier than applying for a large personal loan, but there are a few things to consider as you apply:

• Determine your needs. Before shopping for a loan, determine how much money you’ll need and what you can afford to repay. This can help prevent you from overborrowing and ending up with unaffordable payments. A loan calculator can help you understand what your payments could be.
• Prepare your application. Check your credit report and scores to get an idea of which lenders you could qualify with. If there are any errors on your credit report, contact the credit bureaus to have the mistakes corrected. You should also gather the documents you’ll need for approval, including copies of your identification, income and bank statements.
• Shop for lenders. Getting prequalified with multiple lenders can tell you the rates and terms you could be offered without impacting your credit. Compare lenders based on the annual percentages rates, or APRs, as this is the full cost of the loan, including interest and fees.
• Complete the application. Choose the lowest-rate offer that works best for you and complete your loan application with that lender. You may need to provide additional documents as your lender requests in order to process your loan application.
• Receive your loan funds. Your lender will disburse your funds and you’ll begin repaying your loan. Setting up automatic payments on your loan can help ensure that you won’t miss any payments, which can negatively impact your credit score.

How To Get a Small Personal Loan With Bad Credit

Lenders may have lower credit requirements if you’re applying for a small personal loan. You can increase your odds of approval or qualify for a more affordable loan if you apply with a co-signer who has a good credit history.

Some lenders will accept collateral in order to get approved for a personal loan. The types of collateral that lenders may accept vary and could include vehicles, savings accounts or CDs.

Alternatives to Small Personal Loans

A small personal loan isn’t your only option if you only need to borrow a small amount of money. You can also consider:

Credit Cards

Credit cards are designed for small lending needs and purchases, but they can be more expensive than a small personal loan. A 0% APR credit card, however, can be a good way to finance a small purchase without having to pay any interest. If you put expenses on a credit card, have a plan to repay that debt as interest can accumulate quickly.

Borrowing From Friends and Family

Friends and family may be more willing to offer you a small personal loan than a stranger. If someone is willing to lend you money, it can be worthwhile to write and sign a promissory note to set expectations for repaying the loan.

Forbearance

Some lenders offer a temporary reprieve from making payments if you’re undergoing a short-term financial hardship like a job loss or natural disaster. Forbearance can be a good option to free up cash flow so you can pay for basic expenses while you get back on your feet.