Table of Content
If you are planning on making a purchase and don’t have the ready cash, or you’re experiencing a financial issue, you may have considered a small personal loan.
Small personal loans are typically available from $1,000, depending on the lender, but some lenders offer smaller sums if required. Depending on the amount you borrow, they tend to have shorter terms, which allow you to spread the cost across a manageable period.
In this article, we’ll explore small personal loans in more detail to help determine if one could be a good fit for your financial requirements. Here are The Smart Investor Select’s picks for the best small personal loans:
What Credit Score is Needed for a Small Personal Loan?
The credit score requirements for a personal loan vary across lenders. Each lender has its criteria and algorithms for determining borrower requirements, including minimum credit scores. Typically, lenders require a good to excellent credit score or 690 FICO or higher to gain approval, but some lenders will accept a score as low as 610.
If you have a less-than-perfect credit score, it is worth considering that some lenders will consider other factors when making an approval decision. The lender may assess your employment status, the amount of time you’ve been with your current employer, your annual income, and your credit score.
There are also lenders that specialize in offering small personal loans to those with bad credit, but you need to be wary of payday lenders, who charge incredibly high APRs and fees.
Where Can I Get a Small Personal Loan?
You can shop for a small personal loan with the typical financial institutions that offer standard personal loans. You simply need to check what the minimum amount you can borrow is. Many banks offer personal loans as low as $1,000, a common minimum figure for online lenders. However, some credit unions provide smaller amounts to their members.
It is more appropriate to look at what lenders are best suited to your circumstances. If you have good to excellent credit, you should have no problem qualifying for a personal loan with any lender. However, you may find that the minimum amounts you can borrow tend to be higher.
If you have poor or bad credit, you need to do more in-depth loan shopping. You will need to look for a more specialized lender with less stringent lending criteria.
However, if you have an existing relationship with a lender, such as a bank that holds your checking account, savings, or credit card, you may find that they are willing to consider other factors rather than just relying on your credit score.
OneMain Financial
APR
Loan Term
Minimum Score
Loan Amount
OneMain is unique to other small personal loan providers in that they have over 1,500 physical locations or branches. This is helpful to borrowers who may have issues getting lending with traditional banks.
OneMain Financial enables you to add a co-borrower to your application if you require an emergency loan but have bad or no credit to increase your chances of being approved. The smallest amount you can get is $1,500.
However, if you have good to excellent credit, you may want to look at other providers first. This review will cover mostly OneMain Financial personal loan offerings, even though OneMain considers auto loans like personal loans.
- Application Options
- Less than perfect Credit
- Joint Applicants
- No Prepayment Penalty
- Many Payment Options
- Higher interest rates
- Fees
- Not Available in All States
- Restrictions
- Can I negotiate with OneMain?
Since OneMain has no minimum credit limit requirements, its aim is not to be the most competitive loan option, but to provide finance for those who may struggle with typical lenders.
For this reason, it is unlikely that you will be able to negotiate with OneMain. However, it is still worth trying if you want to negotiate before you agree to the loan or negotiate a settlement figure if your circumstances change before the end of the loan term.
- Is OneMain good for debt consolidation?
OneMain offers personal loans of up to $35,000 over a term of up to five years. This makes this financial institution a good option if you want to consolidate several higher interest debts.
The company even has a dedicated debt consolidation page to provide resources for those who are considering this type of loan.
- Can I pay off a OneMain loan early?
OneMain does not have any prepayment penalties that may impede you from repaying a loan early. However, OneMain is a lender that does charge origination fees for its loans. This fee can vary according to your home state.
In some states, there is a flat fee of up to $500, while in others you could pay a percentage of the loan sum up to 10%. These fees will need to be included in your calculations if you want to repay your loan and switch to another lender.
- Can I add a cosigner to a OneMain personal loan?
OneMain does allow co-borrowers to make personal loan applications, but this is a little different compared to a co-signer. As a co-borrower, the party is not only financially responsible but can also access the loan funds.
This is different to a co-signer, where the second party is only financially responsible if you default on the loan. However, it is possible to use collateral, such as a vehicle to secure your loan and improve your chances of approval.
Upstart
APR
Loan Term
Minimum Score
Loan Amount
Given that Upstart's minimum loan size is merely $1,000, it's a great choice if you're searching for a small loan.
With Upstart, you may have an easier time getting approved for a loan than with the other lenders on our list because their minimal credit score is 600 . You can end up paying a high APR if your credit score is low, so you might want to look into alternatives to personal loans if that is the case.
There are just two loan repayment terms available through Upstart: three years or five years. The organization does, however, typically fund loans within one business day, which is helpful if you require money straight away.
- Soft Pull Inquiry
- Modest Income
- Quick Turnaround Times
- No Prepayment Penalty
- No Processing Fee
- Higher low end rates for those with excellent credit
- Origination Fee
- No Joint Borrowers
- High Interest Rates
- New Company
- When and how will I receive the funds from my Upstart loan?
If you accept your loan before 5 p.m. ET Monday through Friday, you should receive your loan proceeds the following business day. If your application is accepted after 5 p.m. ET Monday through Friday, you should receive your loan proceeds two business days later.
There is an additional three business days between when you accept your loan and when you receive the funds for loans used for educational purposes.
- Is it possible to cosign with Upstart?
You cannot apply for a loan with a cosigner through Upstart. Because this is a personal loan, Upstart claims they can only consider your personal information.
What happens if I miss a payment on my Upstart loan?
If we do not receive your payment by the monthly due date, we will contact you to remind you. You have 15 days from the due date of your payment before any fees are assessed. If you make a monthly payment after the grace period has expired, you may be charged a late fee of 5% of the unpaid amount or $15, whichever is greater.
Please keep in mind that Upstart reports your account's status on each due date. We may exercise all of the remedies available to us under applicable law or the Promissory note in the event of an Event of Default.
- How can I get in touch with Upstart?
There are 2 ways to get in touch with Upstart:
- Sending a message via our contact form or calling 650-204-1000 (local) or 1-855-438-8778 (toll-free) between 6AM and 5PM PST.
- Sending a message to [email protected]
PenFed credit union
APR
Loan Term
Minimum Score
Loan Amount
This lender really has the lowest minimum financing amount on this list, allowing you to get authorized for a loan for as little as $600.
PenFed loans are available for several uses, such as debt consolidation, home repair, paying for medical bills, financing an automobile, and more. Although you don't need to be a member to apply, you must join PenFed and maintain $5 in a qualifying savings account to receive your funds from this lender, which is actually a credit union.
However, it should be noted that PenFed delivers its funds in the form of a paper check. You can pick up your check at any time directly from the bank if you are aware of a PenFed location close by. Otherwise, if you pay for expedited shipment, you could get your money as soon as the following day.
- Small Loan Sizes
- No Origination Fee
- Mobile App
- Joint Loans
- Doesn’t Offer Certain Loan Types
- Lack of Payment Flexibility
Universal Credit
APR
Loan Term
Minimum Score
Loan Amount
Universal credit is another great option for small personal loan, since it's minimum is quite low compared to other lenders - only $1,000. Through its partners, the online lending network Universal Credit provides unsecured personal loans ranging from $1,000 - $50,000.
Even those with bad credit can now get personal loans thanks to Universal Credit, however there are certain costs involved. First off, it has high APRs that are far higher than the most affordable rates on our list. Second, all personal loans made through Universal Credit include origination fees ranging from 4.25 percent to 8 percent.
- Good Range of Loan Size
- Nice Discount
- Fast Funding Time
- Free Credit Monitoring
- Origination Fee
- No Joint Loans
- No Secured/Co-signed Loans
How to Get a Small Personal Loan?
Obtaining a small personal loan is pretty standard practice with most lenders. If you’re shopping online, you may find using a comparison site is the easiest option.
You can check what loan deals you’re eligible for without triggering a hard credit pull. This can be accomplished in just a few simple steps.
1. Provide Your Personal Details
You’ll need to provide basic personal details, so the comparison site or lender can assess your risk profile. You will need to give your full name, address, Social Security Number, income, and employment details.
You will also be asked for contact information, such as an email address or phone number.
2. Provide Your Loan Criteria
Next, you will need to provide the criteria for your proposed loan. This includes the amount you would like to borrow and the term for your loan.
This will enable the comparison company to eliminate any lenders who cannot offer loans for a small amount or are not prepared for your optimal loan term.
3. Compare
Finally, you need to compare loan deals. This can be done via a loan comparison site, but if you’re dealing with specific lenders, it is still essential to make some comparisons to ensure that you get the best deal. We’ll go into how to compare personal loans in more detail below.
Once you’ve decided on a loan deal, you can then submit your application for approval. In many cases, the lender will give an approval decision quickly, and upon approval, most lenders will release the funds within a day or two.
How to Compare Small Personal Loans
Comparing small personal loans is crucial, but many people find the process a little daunting due to the terminology and lengthy loan documents. Fortunately, the actual comparison process is relatively straightforward, providing you know what areas of comparison to concentrate your efforts on.
The features to compare include:
- The Rate: The first thing you’re likely to look at is the rate. This will be determined by your creditworthiness and the terms of your loan. The lower the rate, the less interest you will pay on your loan. One of the problematic aspects of small personal loans is that they are often used as payday loans, which tend to carry a very high rate.
- The Term: Even if you’re looking to borrow a small amount, if you take the loan over a longer term, you will pay more interest across the loan's lifespan. When you’re comparing multiple loan deals, even if the rate is lower, the overall cost is likely to be higher if the term is longer. So, look at the term in conjunction with the rate.
- Fees: This area of comparison is usually detailed in the terms and conditions, but it should not be overlooked. You can incur fees on your loan for several reasons, from being late with your scheduled payment to having a payment returned. Even if you intend to make all your payments on time, administration errors can occur, and you don’t want to get stung with an exorbitant fee.
- Early Repayment Charges: These apply if you decide that you want to repay the balance of the loan before the specified term. This can happen if you have a financial windfall or if you decide that you want to switch to another lender. However, if you incur an early repayment charge, it could negate the benefits of repaying early.
- Ask questions: there are many questions you can ask your lender, so make sure to review them and perfectly understand any aspect of your loan.
What Banks & Credit Unions Offer Small Personal Loans?
There are several banks and financial institutions that offer small personal loans. Some of the best options include:
1. PNC Bank
If you have good credit, PNC Bank is an excellent option to obtain a small personal loan. The rate and terms will depend on your personal profile and location, but you can enter your zip code on the website to see the typical rates in your area.
The minimum loan amount is $1,000, but PNC Bank offers terms of up to 60 months. Again, this is determined by your credit score, with longer repayment periods available for those with higher credit ratings.
2. Discover
While primarily considered a credit card provider, Discover has an impressive selection of finance products, including personal loans.
The main draw of Discover is that they offer next-day funding, but the loan minimums are higher at $2,500. You also need to watch for late payments, as there is a $39 late fee.
3. U.S Bank
If you need an amount less than $1,000, U.S Bank could provide a good solution. The U.S Bank Simple Loans are available for $100 to $1,000 with a repayment term of three months.
The fees are also set at $6 for every $100 you borrow, so you don’t need to worry about complicated APRs and fee structures.
Is a Small Personal Loan a Good Idea?
This depends on your requirements and circumstances. As with any financial product, there are pros and cons associated with small personal loans that you should be aware of before signing on the dotted line.
- Spread the Cost
A small personal loan can allow you to spread the cost of a purchase or an unexpected expense with set monthly repayments over an agreed term.
- Minimal Fees
Unlike many other forms of finance, there tend to be minimal fees associated with small personal loans. This means that you don’t need to worry about fees or charges eating at your loan funds.
- Quick Funding
Since the loan amounts are small and the loans themselves are unsecured, you can usually get an approval decision quickly and funding in as little as one business day.
- Flexibility
Most small personal loans do not have usage restrictions. This means that you can use the funds for practically any purpose.
- Interest Charges
Some lenders charge a higher rate for their small personal loans. If you need to cover an unexpected bill, but you’ll have the funds on your next payday, taking out a loan even for a term of a few months is likely to be far more costly than other methods.
- Set Monthly Repayments
Unlike a credit card where you can repay any amount above the minimum monthly repayment, a loan has a set payment schedule. This means that if you find you have extra cash, you may not be able to repay the loan more quickly without incurring charges.
- Potentially High Fees and Penalties
Many lenders impose a late fee of $35 or more if your regular monthly payment is late. This means that if you slip up or have an admin issue, you could quickly rack up expensive charges on your account.
- Not the Best Option for Everyone
If you have less than perfect credit or there are other circumstances, a small personal loan could actually be detrimental to your overall financial health.
What Are the Main Goals of Small Personal Loans?
While you can typically use a small personal loan for any purpose, there are some top reasons why you may want to consider one.
- An Unexpected Expense: If you need to have significant repairs on your vehicle or some other unexpected expense that you couldn’t cover with your regular paycheck, a small personal loan could allow you to spread the cost into more manageable payments.
- An Alternative to Credit Cards: If you have struggled with managing your credit cards in the past, taking on a small personal loan could be a better alternative, with its set payment structure and terms.
- Moving Costs: Moving home can be costly and if you don’t have the time to save a sufficient amount, a small personal loan could provide a solution. You can borrow the amount you need to cover your moving costs and repay it each month.
- Medical Bills: If you have medical bills that are not fully covered by your insurance, you could make up the shortfall with a small personal loan.
There are a number of reasons for taking out a loan, but this can also influence the average loan amount. In this chart with LendingTree customer data, you can see that credit card refinancing has the highest average loan amount followed by debt consolidation.
Can I Get a Small Personal Loan With Bad Credit?
While many small personal loan products are designed for those with good to excellent credit, there are some lenders who will offer loans to those with bad credit. These lenders may not only consider your credit score, but also other factors.
Specialized lenders also tend to have more relaxed criteria that make it easier to qualify. However, there are some ways that you can improve your eligibility.
- Clean Up Any Errors on Your Credit Report: It is easy to assume that when you have bad credit, there is nothing that you can do. However, there may be errors on your credit report that are contributing to your low score. Request a copy of your report and check carefully for any mistakes, such as outstanding balances, payment errors or unexplained charges.
- Explore Existing Financial Relationships: If you already have a relationship with a bank or lender, check to see if this will be beneficial to getting loan approval. Some banks will offer more flexible terms for their existing customers.
How to Get a Small Personal Loan With Low Interest?
The rate you’re offered will be calculated according to your risk profile. Each lender will assess your creditworthiness according to their own criteria before setting a rate for your loan application. If you want to qualify for a lower rate, there are some things that you will need to do.
- Work on Your Credit Score: The best rates are generally reserved for those with good to excellent credit. So, if you have the time, try to work on improving your credit score. You can do this by reducing your debt to income ratio and credit utilization ratio.
- Consider a Cosigner: If you need the funds in a hurry, you may be able to reduce your available rate by adding a cosigner to your application. If you have a family member with solid credit, they can support your application and provide the lender with the reassurance that if you default, your cosigner will take financial responsibility.
Can I Get a Small Personal Loan With No Credit Check?
While it is possible to get a small personal loan with no credit check, it is something to be wary of. There are a number of banks that offer small personal loans to their checking account holders, but many lenders offering no credit check loans tend to be payday lenders.
These lenders market themselves to those who don’t want to be subject to a credit check. Unfortunately, you pay a sky high premium for this service. Payday lenders typically allow you to borrow the money until your next payday, but may extend the term to up to six weeks.
However, when you look at the APR for these loans, they can be anywhere from 50% to over 300%. There are also hefty penalties if you fail to make your repayments on schedule.
In this chart compiled with LendingTree customer data, you can see that those with a 720+ credit score pay an average of 7.63%. At the other end of the scale, for those with a poor credit rating of less than 560, the rate shoots up to an eye-watering 113%.
Alternatives to Small Loans
If you’re unsure about whether a small loan is a right choice for you, it is worth considering the alternatives. These include:
- An overdraft: If you have a checking account, you may be able to obtain an overdraft facility for your account. While this may not be for as much as a small personal loan, if you only need a couple of hundred dollars, it could be a far less costly option.
- Credit Cards: If you only need the funds for a very short time, you could simply charge the purchase or bill to your credit card. Providing you can repay it quickly, you should only pay a minimal amount of interest. In fact, if you can repay the funds before the end of your billing cycle, you’ll not pay any interest at all.
- Personal Line of Credit: Many banks and financial institutions offer personal lines of credit. You can apply for this facility in advance, and simply call down funds as and when you need them up to your designated limit. The benefit of this is that you’ll only pay interest on the funds you’ve borrowed.
- Salary Advance: Finally, a cheaper alternative to a small personal loan is to ask your employer for a salary advance. This is only suitable if you need to cover an expense that you can manage with your regular paycheck.
