Best Small Personal Loans: Where to Look and What to Avoid
Bills Bottom Line
You may be eligible for a small personal loan of just a few hundred to a few thousand dollars. Credit unions, online lenders, and some banks all offer them. Compare the interest rate, fees, and repayment term before you apply, and steer clear of any offer priced above a 36% APR ceiling.
Table of Contents
Not every financial emergency is huge. Sometimes, you just need a few hundred dollars, maybe a couple thousand, for a car repair or a medical bill. But every personal loan ad is pushing $10,000 or more, or dangling a "guaranteed approval" that feels unrealistic or perhaps a little shady.
Small personal loans are real and can be helpful for life’s little glitches. A small personal loan is an installment loan, generally a few hundred to a few thousand dollars. It’s repaid in fixed monthly payments over a set term. Credit unions, banks, and online lenders all offer them, and approval depends on your credit and income.
Knowing where to look, and what to check before you sign, separates a fair small loan from a bad one.
What counts as a small personal loan
There's no official cutoff for what makes a loan small. Lenders set their own minimums: some go as low as a few hundred dollars, others might be several thousand. If every offer you've seen starts at $5,000, that's not the entire market. You often have to look past the biggest ads to find the littlest loans.
Personal loan terms commonly run two to seven years, and some lenders offer shorter or longer schedules. A shorter term on a small loan helps keep the total interest low and gets you to a zero balance faster.
Where to find a small personal loan
Three types of lenders issue small personal loans, and each fits a different situation.
- Credit unions often have the lowest minimums and friendliest terms, though membership is required.
- Online lenders offer convenience, and often provide flexible terms and amounts.
- Banks can work well if you already have an account; an existing relationship may help with approval or earn you a rate discount.
Most personal loans are unsecured. Personal loans are sometimes called "signature loans" for this reason. Your signature is your promise to repay, and no collateral backs the loan for most borrowers. Some lenders offer secured options, too.
A few concrete examples show the potential range:
- PenFed Credit Union personal loans start as low as $600.
- Happen Bank (formerly LendingClub) and Upstart both offer loans as low as $1,000, though Upstart's minimum climbs in a few states (Georgia's floor is $3,100, Hawaii's is $1,500, and Massachusetts’ is $7,000).
- OneMain Financial personal loans start at $1,500.
- Best Egg and Prosper both start loans at $2,000.
If you belong to a federal credit union, ask about a Payday Alternative Loan (PAL). PALs I loans let you borrow $200 to $1,000 over one to six months, capped at 28% APR with a maximum $20 application fee. A one-month membership is required first. PALs II loans go up to $2,000, over one to 12 months, at the same 28% cap, with no membership wait. It's the only loan on this list with a rate cap written into federal law.
For a fuller side-by-side look, compare the best personal loan companies.
What a small loan actually costs
Two numbers drive the cost of a loan: the interest rate and origination fees. Fees range widely: zero with some lenders, up to roughly 12% of the loan at others, and the fee comes out before the money reaches you. A $1,000 loan with a 5% fee arrives as $950, though you still owe the full $1,000. Ask about the fee upfront, since it rarely shows up in the advertised rate. The APR (annual percentage rate) incorporates most loan fees and the interest rate, and helps you compare loans with different pricing structures. For instance, a 15% loan with no fees and a 12% loan with a 3% origination charge. The loan with the lower APR is cheaper over its lifetime.
Then there's a ceiling worth adopting: 36% APR. The National Consumer Law Center recommends a 36% APR limit, including all fees, as the benchmark for affordable lending. Consumer-protection groups widely consider loans priced above 36% APR predatory. Treat that number as your line in the sand, whatever the loan size.
Want current numbers instead of ranges? Compare personal loan rates.
What it takes to qualify
Lenders look at the same handful of things regardless of loan size: your credit score, credit history, income, employment, and debt-to-income ratio (how much of your monthly income goes to debt payments). Some fintech lenders also weigh education or employment data, but the core factors don't typically change.
Your credit score sorts you into a tier. FICO ranks scores as:
- Poor: 579 or below
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 or higher
Want to know what credit score you need for a personal loan before you apply? Check the specifics for your situation.
“Risk-free” prequalifying lets you preview rates and terms without committing to anything and without damaging your credit score. Most lenders offer this, but not all. Make sure it’s a soft inquiry if you’re still in the shopping stage. A formal application is different: It triggers a hard inquiry, which could knock a few points off your score. Learn more about the soft credit check and when it applies.
How to spot a predatory small-dollar loan
Two things should make you pause immediately:
- "Guaranteed approval"
- Upfront charges before your funds arrive
Legitimate lenders check your credit and review your application before making an offer. They don't promise a yes in advance, and they don't ask you to wire money first. Both are hallmark signs of an advance-fee loan scam.
Rate alone doesn't automatically make a lender a scam. NetCredit, for example, is a licensed lender that reports to the credit bureaus, checks your application, and never demands payment upfront. Nothing about it is illegitimate. Its disclosed APRs run from 34.99% to 99.99%, and that range puts a chunk of its offers well past the 36% line from the cost section above.
That's the test in action: A real lender can still hand you an expensive loan offer. Read the number before you sign, not just the lender's reputation.
Working with weaker credit? Personal loans for bad credit covers lenders built for that range.
A small loan vs. other ways to borrow a little
There’s more than one way to borrow a small amount. Here's how the alternatives stack up.
Credit cards can be relatively easy to open, and offered by everyone from credit unions to big banks. Most credit cards come with a built-in grace period that means you can avoid interest fees as long as you pay in full before your due date. Make sure you only spend what you can afford to repay to avoid the fees from double-digit interest rates.
Home equity is a separate animal entirely. Home equity loans and home equity lines of credit (HELOCs) are a way to borrow against equity you've built in your home. The loans are secured by your house, so defaulting risks foreclosure, something an unsecured personal loan never puts on the table. Interest rates are often lower than personal loans, however, so it could be worth the tradeoff.
Cash-advance apps, like Dave and EarnIn, aren't personal loans, and they're not underwritten the same way. The CFPB found that a typical employer-partnered earned-wage advance carries an APR around 109.5%. That figure factors in monthly subscription fees, up to roughly $14.99, plus optional "tips" that function like a fee in practice. The cost rarely shows up clearly in the app's marketing, so run the math yourself before you tap "advance."
Bills Action Plan
- Check your credit union first. Ask specifically about a Payday Alternative Loan (PALs I or II) or its small personal loan minimum. Credit unions often beat other lenders on both rate and minimum amount.
- Compare at least two lender types side by side. Look at the interest rate, any origination fee, and the total repayment amount, not just the advertised low end.
- Walk away from guaranteed approval. If a lender promises approval before checking your credit, or asks for payment before sending your funds, treat it as a scam signal and stop.
Key Terms
APR: The yearly cost of borrowing, expressed as a percentage. It includes your interest rate plus most lender fees, so you can compare loans with different cost structures. It's not the same as your monthly payment, which is calculated from the interest rate alone.
Origination fee: A one-time charge some lenders subtract from your loan before you get the money. It commonly runs from 0% to around 12% of what you borrow.
Soft inquiry: A quick look at your credit that doesn't affect your score. Prequalifying with a lender usually creates one. Formally applying uses a hard inquiry instead, which could cost you a few points for up to a year or two.
Signature loan: Another name for an unsecured personal loan. The lender takes your signature as your promise to repay, since there's no collateral backing the loan.
Payday Alternative Loan (PAL): A small loan only federal credit unions can offer, capped by law at 28% APR. It's built specifically to compete with predatory payday loans.
This information is for general education and isn't personalized financial or legal advice. Loan terms, rates, and eligibility requirements vary by lender and can change; confirm current details directly with the lender before you apply.
What's the smallest personal loan I can get?
Some credit unions may offer personal loans as small as $100, including SchoolsFirst FCU. PenFed Credit Union starts as low as $600. Several online lenders and credit unions start between $1,000 and $2,000. Your own credit union may also offer a Payday Alternative Loan for as little as $200.
Do small personal loans hurt your credit?
Yes, opening any new credit could ding your credit score. Applying triggers a hard inquiry, which can lower your score by a few points for up to a year or two. New accounts impact your average account age and could impact your credit mix. On-time loan payments could help your credit over time. Checking your rate first with prequalification usually creates a soft inquiry instead, which doesn't affect your score.
Can I get a small personal loan with bad credit?
Yes, some lenders work with lower credit scores, though expect a higher interest rate. Check your local credit unions first, which often offer lower rates and fees to members.
Is a small personal loan legit, or is it a scam?
Small personal loans are a normal, legitimate product offered by credit unions, banks, and online lenders. Watch for guaranteed-approval promises or any request to pay before you receive funds; those are scam signs, not features of a legitimate small loan.