A small personal loan may be a good way to cover an unexpected expense or one you didn't budget for, like a surprise medical bill, car repair, vet bill, or weekend getaway. Upgrade offers the best small personal loans, thanks to competitive interest rates, loans for fair credit, and discounts.
Even if you have a credit card, a personal loan might be a better choice. But to find a small personal loan, you need to know where to look. We've compiled a list of the best small personal loans to help get you started.
Why trust Credible
Best small personal loans
Methodology
Credible evaluated the best personal loan lenders for small loans based on factors such as customer experience, minimum fixed rate, minimum loan amount, funding time, loan terms, fees, interest rates, discounts, and minimum credit score requirements. Credible’s team of experts gathered information from each lender’s website, customer service department, in-house resources, and via email support. Each data point was verified to make sure it was accurate at the time of publication.
Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.
How to compare small personal loans
It’s important to make smart decisions about borrowing money, even if it’s a small amount. Keep these factors in mind as you compare small personal loans:
- Loan amounts: Some online lenders offer $1,000 loans, and others offer loans starting at $1,500 or $2,000. Others specialize in bigger loans, such as BHG ($20,000 to $200,000). To save time, narrow your search to lenders offering the amount of money you need.
- APR: The annual percentage rate represents the yearly cost of borrowing, including the interest rate and any upfront fees. Even with a small personal loan, a lower APR can save you money.
- Repayment terms: Personal loan repayment terms typically range between 1 and 7 years. But small personal loans will probably have repayment terms of no more than 2 or 3 years.
- Funding time: If you have an emergency expense to cover, fast funding is important. Depending on the lender, you may receive your funds the same day you get approved, within 24 hours, or in a few business days. Some lenders can take up to a week.
- Fees: Some lenders charge fees such as origination fees, insufficient funds fees, and late fees. Origination fees could range up to 12% of the loan amount, depending on the lender, and are usually deducted from the loan funds upfront.
- Reputation and customer service: Before taking out any loan, consider reading customer reviews on sites like Trustpilot and Better Business Bureau.
Check Out: Best Emergency Loans
How to prequalify
When you’re looking for a small personal loan, an online personal loan marketplace is a good place to start. You can prequalify with multiple lenders and compare the results to get an idea of the interest rates and repayment terms that each one might offer.
While prequalification is a useful tool that doesn’t affect your credit score, it’s not an offer of credit. The results may differ from the rates and terms included in a loan offer after you apply with a lender.
Important
Lenders typically run a hard credit inquiry when you apply for a personal loan, which could lower your credit score by up to 10 points for as long as one year.
What is a small personal loan and how does it work?
While “small” is a relative term, a small personal loan can be thought of as one that's less than $2,000.
Personal loans are typically installment loans, funded upfront in a lump sum and repaid month by month. APRs are usually fixed instead of variable, so the monthly payment amount remains the same.
How much will my monthly payments cost?
Here are a few examples using a two-year, $2,000 personal loan and average credit scores based on Credible data:
Lenders may offer multiple options for APR or length of repayment terms. A shorter repayment term can save you money on interest, while longer terms generally come with lower monthly payments.
When comparing repayment options, choose one that strikes a balance between total interest costs and how much you can comfortably afford to pay each month. Use a personal loan calculator to simulate different repayment plans.
Pros and cons
Keep these benefits and drawbacks in mind before you take out a small personal loan.
Pros
- Can help cover a small expense
- Easy application
- Fast funding
Cons
- May not be large enough
- May need good credit to qualify
- Potential fees
Pros
- Can help cover a small expense: A small personal loan may make it easier to pay for a small expense. Limiting your loan request can also help you avoid overborrowing.
- Easy application: Typically, you can apply for a small personal loan online, from the comfort of your own home. Most applications take a few minutes to complete.
- Fast funding: Depending on the lender, you could receive the loan funds the same day you're approved or the next business day.
Cons
- May not be large enough: Small personal loans provide fewer funds, so they might not cover your expense completely. You might have to look elsewhere for additional funds, depending on what you qualify for.
- May need good credit to qualify: If you don’t have good credit, your options for small personal loans may be limited. Many lenders prefer borrowers with a good to excellent credit score.
- Potential fees: Some lenders charge fees that can increase the overall cost of your small personal loan. A few examples are origination fees and late fees.
How to qualify for a small personal loan
No one is guaranteed credit, not even for a small personal loan. Here are some considerations to keep in mind:
Eligibility requirements
Each lender has its own eligibility criteria for small personal loans. Since the monthly payment on a small personal loan is relatively low, it may be easier to qualify for than a larger personal loan. Most lenders consider the following:
- Credit score: Lenders prefer borrowers with good to excellent credit (a FICO score of 670 or above). Some lenders are more lenient, however, and may accept those with fair credit or bad credit, though usually at a higher APR.
- Income: By verifying your income through pay stubs or bank statements, you can demonstrate your ability to pay back a small personal loan. A stable income can increase your chances of approval.
- Debt-to-income ratio (DTI): Your DTI gives lenders an idea of how much room is in your budget for additional debt. To calculate DTI, divide your minimum monthly debt payments by your monthly income before taxes. Most lenders like to see a DTI of 36% or less.
Check Out: How To Get a Small Loan
Minimum credit score requirements
Credit scores are one of the criteria that most lenders use to gauge your ability to pay back a personal loan. Many have minimum credit score requirements, although not all lenders disclose them. Find out if a lender has a minimum credit score requirement before applying.
The FICO credit score ranges are:
- Poor (less than 580): Poor credit or no credit history can make it difficult, but not necessarily impossible, to get approved for a personal loan.
- Fair (580 to 669): Though you may be able to take out a loan with fair credit, you’ll likely be charged a higher APR.
- Good (670 to 739): With good credit, you’re more likely to qualify for a loan and also get a lower APR than someone with fair or bad credit.
- Very good (740-799): Very good credit puts you in a position to receive APRs on the low end of many personal loans.
- Exceptional (800+): Exceptional credit opens the door to many personal loans and could help you land the lowest advertised APR.
Good to know
Your FICO score, the most commonly used model for lending decisions, is based on five categories: payment history (35%), amount of debt owed (30%), length of credit history (15%), credit mix (10%), and new credit (10%).
Check Out: What Credit Score Do You Need for a Personal Loan?
Where can I get a small personal loan?
You can get small personal loans from banks, online lenders, or credit unions. Each option has advantages and drawbacks.
Banks
Many banks, but not all, offer small personal loans. Banks such as Bank of America and U.S. Bank offer small personal loans that don’t require good credit to existing customers, such as their Balance Assist and Simple Loan products, respectively. Some banks also offer APR discounts to existing customers. If you appreciate in-person customer service, talking to a loan officer at a branch office could be appealing.
Read More: Best Banks for Personal Loans
Credit unions
Member-owned, nonprofit credit unions are another option for small personal loans. For example, Navy Federal offers a personal expense loan starting at $250. Some credit unions also offer payday alternative loans (PALs). Depending on whether the loan is a PALs I or PALs II, you could borrow up to $2,000 for a repayment term between one month and 12 months. They're especially suitable if you have bad or fair credit and are already a credit union member. APRs on PALs are capped at 28%.
Read More: Best Credit Unions for Personal Loans
Online lenders
With no branch offices to maintain, many online personal loan lenders are able to reduce overhead and pass the savings along to consumers. The use of automated technology and artificial intelligence allows online lenders to make lending decisions that are less reliant on credit scores. Although many online lenders offer small personal loans with minimum APRs as low as 7%, their maximum APRs may be higher than those of banks and credit unions.
Read More: Best Online Personal Loans
How to apply for a small personal loan
Follow these steps to apply for a small personal loan.
- Compare lenders: Do your research and find at least a few lenders that offer small personal loans that align with your goals. Consider APRs, repayment terms, loan amounts, fees, and eligibility requirements.
- Prequalify: Some lenders let you prequalify for a small personal loan without any impact to your credit. This lets you preview possible rates, amounts, and terms from different lenders before applying. Prequalification won't impact your credit. But be prepared to provide your date of birth and other identifying information like your Social Security number, so lenders can give you a rate estimate.
- Pick a loan option: Choose the loan that makes the most sense for your situation.
- Complete the application: Fill out the full application. Be prepared to submit documents, like your government-issued ID and pay stubs. It is at this point the lender will conduct a hard credit inquiry.
- Get your funds: Once approved, you’ll have to sign a loan agreement. You can sometimes get your funds via direct deposit as soon as the same or next business day after approval, but this varies by lender.
Related: How Do Personal Loans Affect Your Credit Score?
Alternatives
Here are some other options to consider:
- Credit card: Paying for a small expense with your credit card would save you the trouble of applying for new credit. However, credit card interest rates are considerably higher on average than personal loan interest rates. The Federal Reserve estimates the average credit card interest rate at 21.47% and the average interest rate on a two-year personal loan at 12.32%.
- Cash advance apps: You can typically get a small amount from a cash advance app, such as a few hundred dollars, depending on the app and your income. These apps don’t require a credit check, but watch out for fees, such as subscription fees, expedited funds fees, and optional tips. You must also pay the amount back by your next paycheck. For example, Earnin lets you borrow up to $100 per day (up to $750 per pay period) and has no mandatory fees.
- “Buy now, pay later” services (BNPL): BNPL lets you pay for a purchase in no-interest installments for a few weeks or months, or in some cases over a longer period with interest. The amount you can borrow depends on the provider. Some providers charge fees, such as late fees. BNPL services may or may not report payments to credit bureaus. Affirm and Klarna are two providers to consider.
- Borrowing from family or friends: If you have family or friends you can borrow from, it may be cheaper than a traditional loan. However, make sure you come to a written agreement on terms and expectations for repayment.
- Side hustle: Ride-hailing jobs, selling unwanted items, or a part-time gig can get you some extra money if you don’t want to take out a loan.
- Nonprofit assistance: Local services such as nonprofits can connect you with resources to help you with everyday expenses like groceries. Contact 211 for community services in your area.
Related: Payday Loans vs. Cash Advances
Tips on avoiding predatory lenders
There are plenty of legitimate small loan lenders out there, but unfortunately, there are also plenty that prey on those who need money now.
To avoid predatory lenders, take the following steps before agreeing to any loan:
- Research lenders thoroughly: Check online reviews and ratings from resources like the Better Business Bureau (BBB), the Federal Trade Commission (FTC), and Trustpilot. If you can’t find a lender listed on Trustpilot or the BBB, it could be a personal loan scam. Check listed lenders for patterns of serious or unresolved complaints.
- Avoid loans that guarantee approval: Most lenders either run your credit or check your bank account to protect against nonpayment. If any lender promises to approve you no matter what, it’s unlikely they’re a legitimate lender.
- Recognize high-pressure tactics: If a lender pressures you to close on a loan today, to borrow more than you need, or in any way makes you feel uncomfortable, walk away. That lender most likely has its own best interests in mind and not yours.
- Review terms and find print closely: Some legitimate types of lending may have bad actors that don’t properly disclose fees. For instance, the FTC took action against cash app provider Dave in November 2024 for charging undisclosed fees and “tips” to consumers without their consent.
- Watch out for “too good to be true”: If a lender offers a loan amount, APR, or repayment term that is far better than what you could qualify for elsewhere, be very careful. Thoroughly vet that lender before proceeding and confirm other borrowers’ experiences on sites like the BBB and Trustpilot.
- Check the APR: If a lender doesn’t disclose the loan’s APR, that’s an immediate red flag. Use an APR calculator to determine it yourself. Loans with triple-digit APRs are often predatory.
One of the most common types of predatory loans is payday loans. These loans are typically $500 or less (maximums vary by state), due by your next paycheck, and have triple-digit APRs. High fees and short repayment terms make them hard to repay, which leads many borrowers to roll loans over, renew them, or take out loans repeatedly to make ends meet. In fact, the Center for Responsible Lending found that payday loan lenders are reliant on such a business model — they collected 75% of their fees from borrowers with more than 10 loans per year.
Related: Guide to Personal Loans
FAQ
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