A small personal loan can be a quick and convenient option to pay for an immediate expense, like a medical bill or car repair.
While many lenders typically offer personal loans above a certain threshold, typically $ 2,000, you will find options for smaller loans with many online lenders and most credit unions.
Unlike a car or home loan, an unsecured personal loan does not require you to give collateral in exchange for borrowing money. Your interest rate is based almost entirely on your creditworthiness. If your credit is poor, you may still qualify for a loan, but you will pay a higher rate than someone with good credit.
There are some basic requirements that a small personal loan should meet, which should be remembered when looking for a loan. According to the National Consumer Law Center, loans are only considered “affordable” if they have:
A maximum annual percentage rate of 36%
A loan period of at least three months
Fixed monthly repayment amounts, no lump sum payments
Here’s where you can get a small loan:
Small loans from online lenders
Many online lenders offer loans starting at $ 1,000 and $ 3,000. Online personal loans are quick and convenient. Your interest rate is based on traditional factors such as your credit score, credit history, and income, but some lenders will take other factors into account as well, such as your industry and level of business. education.
What there is to know:
Most lenders will allow you to check rates without affecting your credit, so you can shop around with more than one lender.
With reputable lender, rates for people with bad credit cap at 36%
Some lenders may charge an origination fee of between 1% and 5% of the loan amount. Before choosing a loan, review all the fees charged by the lender and their flexibility to see what is best for you.
Online lenders who offer small personal loans
Minimum loan amount
Small loans from credit unions
Your local credit union is the best place to get a small dollar loan. Since credit unions are non-profit institutions designed to serve their members, you are more likely to get a small, affordable loan here than at other types of financial institutions. Many credit unions look more than your credit score when they assess you for a loan.
What there is to know:
You will need to be a member of a credit union to apply for a loan. You can usually become one if you live, work, or worship in the area and deposit $ 25 into a savings account.
Federal credit unions, which are insured by the U.S. government, offer alternative payday loans, usually between $ 200 and $ 1,000, to borrowers with low credit scores
By law, federal credit unions can charge maximum APRs of 18% for personal loans and 28% for alternative payday loans
State credit unions may have higher rates
>> MORE: NerdWallet’s Best Credit Unions
Small loans from banks
Not all major banks offer personal loans. Among the five largest banks in the country, Bank of America, Capital One and Chase no longer issue such loans; Citibank and Wells fargo still do, as do some small banks.
Borrowers from these banks receive interest rates based on their credit profile and the state in which they live. If you have great credit and a good relationship with the bank, you can get a low interest rate on a small personal loan. Try calling the bank’s customer service or visiting their website to get the range of interest rates they offer.
Citibank loans start at $ 2,000 and require applicants to open a bank account before applying for a loan, among other conditions. Wells Fargo loans start at $ 3,000. Existing customers can apply online, while new customers must visit a branch.
No Credit Check Loans and Payday Lenders
There is no faster way to get a small loan than to visit a storefront or an online lender that does not check your credit. It’s because they start off with interest rates so high – 200%, 300% or even more – that most borrowers find themselves trapped in a cycle of debt. According to the Consumer Financial Protection Bureau, four in five payday loan borrowers renew or renew their loans.
If you’re anxious to get a personal loan and need cash fast, try:
If you are unsure of your credit rating, get it for free on NerdWallet.
Build your emergency fund in an amount that saves you from having to take out a small loan. The recommended long-term goal is three to six months of spending, but even $ 500 in the bank will get you through many small crises.
To consider work on your credit over time, which will give you cheaper options with lenders or credit cards in an emergency.