Best personal loans to cover small expenses of November 2023
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BLUEPRINT
Updated 2:31 p.m. UTC Nov. 9, 2023
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While high borrowing limits can be helpful to cover large purchases, you might only need access to a small amount of cash. In this case, a small personal loan can be a good option. This kind of loan can also help you borrow only what you need and avoid paying additional interest and fees.
The best small personal loans offer competitive interest rates, minimum loan amounts of up to $2,000 and a variety of repayment terms. Some also have limited fees, borrower discounts and more lenient credit score requirements.
To determine the best small personal loans for a wide array of borrowers, we compared 24 lenders using these metrics as well as other factors like co-signer capability, state availability and customer experience.
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LendingPoint
: Best for fast funding
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Upgrade
: Best for poor credit
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Oportun
: Best for minor expenses
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Avant
: Best for fair credit
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Upstart
: Best for thin credit
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U.S. Bank
: Best for no origination fee
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LendingClub
: Best for co-borrowers
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PenFed
: Best for competitive rates
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Universal Credit
: Best for fast funding
Best small personal loans
LendingPoint
Upgrade
Oportun
Avant
Upstart
U.S. Bank
LendingClub
PenFed
Universal Credit
Compare the best small personal loans
Methodology
Our expert writers and editors have reviewed and researched 23 popular lenders to help you find the best small personal loan. Out of all the lenders considered, the nine that made our list excelled in areas across the following categories (with weightings): loan details (20%), loan cost (35%), eligibility and accessibility (20%), customer service (15%) and ease of application (10%).
Within each major category, we considered several characteristics, including APR ranges, minimum loan amounts, maximum terms, minimum credit score requirements, co-signer acceptance and funding time. We also evaluated each provider’s late fees, prepayment penalties and discounts as well as their state availability, customer support options and customer reviews.
Why some lenders didn’t make the cut
Of the 23 personal loan lenders that we reviewed, only a fraction made the cut. The reasons for this varied by lender, with several not receiving high enough scores to be included due to having higher loan minimums. Others scored lower due to having higher APRs or not permitting co-signers.
What qualifies as a small loan?
Small personal loans generally range from $1,000 to $10,000, with some lenders offering even lower amounts than this. This type of loan can be used for a variety of purposes, such as covering an emergency expense or consolidating debt.
Loans of this size also tend to be easier to qualify for compared to larger loans.
Best places to get a small loan
There are a few types of reputable lenders that offer small loans, including:
Online lenders
Online lenders provide a fully online experience with no physical branch locations. They also generally offer the fastest funding speeds, making them a good option if you need quick access to cash. Because online lenders have lower operating costs compared to traditional banks and credit unions, they sometimes provide lower interest rates, too.
These lenders also tend to be more willing to work with borrowers with less-than-stellar credit. However, keep in mind that bad credit loans generally come with higher interest rates compared to good credit loans.
Banks
Traditional banks tend to have more stringent eligibility criteria compared to online lenders and credit unions. Funding times can also be slower than online lenders. However, you might be able to qualify for a loyalty rate discount or a higher loan amount if you already have an existing account.
Credit unions
Unlike banks and online lenders, credit unions are nonprofit organizations. Because of this, they tend to have lower interest rates and fewer fees in comparison. Credit unions are also sometimes more willing to work with borrowers who have poor or fair credit.
Just keep in mind that while you generally don’t have to join the credit union to apply for a loan, you’ll have to become a member if you are approved and want to accept the loan. Funding times for credit union loans can also be slower than those offered by online lenders.
Beware of short-term loan lenders. Lenders that offer payday loans, pawn shop loans or car title loans can provide small loans without a credit check. However, they also tend to charge extremely high interest rates and fees — so treat them only as a last resort.
How to compare small personal loans
If you’re looking for a small loan, it’s important to shop around and compare your options with as many lenders as possible. This way, you can more easily find a good deal on a loan that works for your situation.
Here are some vital factors to consider as you weigh your options:
Loan amounts
If you’re looking for a small loan, make sure to check with the lender to see if you can get how much you need without borrowing more than necessary. While many lenders offer small loans of $1,000 or less, others have higher borrowing minimums.
Interest rates
Your interest rate plays a major part in determining your overall borrowing costs. Interest rates on personal loans can range from under 6% to 36%, depending on the lender as well as other factors like your credit and repayment term.
Repayment terms
You’ll typically have one to seven years to repay a personal loan, depending on the lender. It’s generally best to choose the shortest term you can afford to keep interest costs as low as possible. Many lenders also offer better rates for shorter terms. Longer repayment terms, on the other hand, provide lower monthly payments but mean paying more in interest over time.
Tip: You can use our personal loan calculator to estimate your payments as well as total interest costs with different repayment terms.
Fees
Many lenders charge fees on personal loans, such as origination fees and late fees. These costs can significantly increase the overall cost of your loan. Before signing a loan agreement, make sure to see what fees you can expect.
Qualifying criteria
Make sure to check what each lender requires to get approved for a loan. In many cases, you’ll need good credit, verifiable income and a low debt-to-income (DTI) ratio to qualify. There are also lenders that offer loans to borrowers with poor and fair credit scores — though these loans generally come with higher interest rates compared to good credit loans.
Lender reputation
Double-check that each lender you’re considering is legitimate and provides good customer service. You can visit sites like the Better Business Bureau or Trustpilot to get a feel for other customers’ experiences.
For small personal loans, it’s generally best to stick with traditional personal loan lenders and avoid lenders that offer payday loans, pawn shop loans or car title loans.
How to apply for a small personal loan
If you’re ready to apply for a small personal loan, follow these steps:
- Check your credit. When you apply for a personal loan, the lender will review your credit to determine if you qualify as well as your interest rate. You can use a site like AnnualCreditReport.com to check your credit reports and see where you stand before you apply. If you find any errors, report them to the appropriate credit bureau to potentially boost your credit score.
- Compare lenders. Take the time to shop around and compare your options with as many lenders as possible. Consider important factors like loan amounts, interest rates, repayment terms, fees and eligibility requirements. Many lenders allow you to prequalify with only a soft credit check that won’t hurt your credit score, which makes it easier to compare your offers.
- Pick a loan option and apply. After you’ve done your research, choose the lender you prefer. You’ll then need to formally submit a full application. This can often be done online, though some traditional banks and credit unions might require you to visit a loan officer at a local branch. Be prepared to submit required documentation, such as proof of income, employment status and identity.
- Get your funds. If you’re approved, the lender will have you sign the loan agreement, which will include the loan amount, interest rate, repayment schedule and other terms. The funds will then be disbursed to you, often via direct deposit into your bank account. This typically takes about a week, though some lenders fund their loans as soon as the same or next business day after approval.
Alternatives to small personal loans
In addition to traditional personal loans, other small loan alternatives include options like payday loans, pawn shop loans and car title loans. While these sorts of loans can be enticing because of their lack of credit score requirements and fast funding, they’re often predatory in nature, and they can come with enormously high APRs — sometimes as high as 400%, depending on the type of loan.
Plus, if you’re unable to pay off your loan before the short repayment term ends, you might end up rolling it over into a new loan — and could get stuck in a cycle of debt. And in the case of pawn shop loans and car title loans, you also risk losing your property if you can’t make your payments.
Because of these risks, these types of short-term loans should only be used as a last resort. In almost all cases, you’re safer sticking with a traditional personal loan with reasonable rates and fees from a legitimate lender. If you can’t get approved on your own, you could also consider applying with a creditworthy co-signer to increase your approval chances.
The minimum loan amount for personal loans varies depending on the lender. While several lenders offer minimums of $1,000, others provide loans as small as a few hundred dollars. For example, you can borrow as little as $300 with Oportun or $600 with PenFed.
When you initially apply for a small personal loan, the lender will perform a hard credit check to determine your creditworthiness. This could cause a slight but temporary drop in your credit score (usually five points for less) and will remain on your credit report for two years — though it typically only impacts your score for one.
Taking out a small personal loan could also help your credit, depending on how you manage it. For example, if you make all of your payments on time, you could see an improvement in your credit score over time — though “this depends on whether the lender reports to the credit bureaus,” says Jeffrey Stouffer, a certified financial planner.
On the other hand, missing payments could negatively impact your credit score. “If someone falls behind on a loan or defaults, a creditor will most likely report the adverse experience even if the creditor normally does not report at all,” says Stouffer.
Yes, you might be able to get a small personal loan with bad credit. While getting approved for a personal loan typically requires good to excellent credit, there are also several lenders that accept lower credit scores. Just keep in mind that bad credit loans tend to come with higher interest rates compared to good credit loans. In general, the higher your credit score, the better your rate will be.
If you’re struggling to get approved on your own, consider applying with a creditworthy co-signer to improve your chances. A co-signer can be anyone (such as a parent, a friend or another relative) with good credit who is willing to share responsibility for the loan. Remember that if you can’t keep up with your payments, your co-signer will be on the hook — so be sure to borrow responsibly and double-check that you can comfortably manage repayment before committing to any loan agreement.
In some cases, small personal loans can be easier to get approved for compared to large loans, depending on the lender. This is because smaller loans are less risky for lenders. Small loans also tend to have lower monthly payments, meaning you won’t need as much income to be eligible.
However, keep in mind that requirements will vary by lender. While eligibility criteria for a small loan might be less stringent, you’ll still generally need decent credit, verifiable income and a low DTI ratio to qualify.
If you’re struggling to qualify on your own, you could also consider applying with a co-signer or joint applicant. Not all lenders permit these, though, so you’ll have to check beforehand.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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