Best Small Loans of May 2024

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, a needed car repair, a vet bill, or a weekend getaway. Even if you have a credit card, a personal loan is often a better choice. This is because personal loan rates, on average, are much lower than credit card rates. According to the Federal Reserve, the average rate on a two-year personal loan was 12.49%, while the average credit card rates was 21.59%. 

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, with loan amounts starting at $600, to get you started. 

Compare small loan rates of May 2024

Best small loans

As you compare lenders, look for small personal loans that offer the amount you need with credit score and income minimums you can meet. Then, prequalify with multiple lenders to get a better sense of the APRs and loan terms you might qualify for. You'll typically need to provide your Social Security number so lenders can estimate your rates, but prequalification won't hurt your credit. 

(Prequalification is not an offer of credit either, and your final rate may be different. When you proceed to a formal application, the lender will conduct a hard credit pull that can slightly lower your score.)

Upgrade: Best for fair credit

Universal Credit: Best debt consolidation loans for bad credit

LendingClub: Best online experience

OneMain Financial: Best bad credit personal loans

Upstart: Best fast personal loans for all credit types

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

Here are several factors to keep in mind as you shop around and compare small personal loans.

• APR: The annual percentage rate represents your yearly borrowing cost in relation to the total loan amount, and includes the interest rate and any upfront fees. A lower APR can lead to hundreds of dollars in savings.
• Loan amounts: Many lenders offer small personal loans of $1,000, and some offer even smaller loan amounts. But personal loans are available up to $50,000 or more, if you qualify and dependig on the lender. It’s advisable to only borrow the amount you need.
• Repayment terms: Typically, you’ll have between 1 and 7 years to pay back a personal loan. A shorter repayment term can save you money on interest, while longer terms generally come with lower monthly payments.
• Fees: Some lenders charge fees on small personal loans. For example, you may face origination fees, insufficient funds fees, and late fees. Origination fees typically range from 1% to 12%, depending on the lender, and are usually deducted from the loan funds before you receive them. Origination fees are accounted for in the loan's APR, so you can easily compare the cost of a loan without an origination fee to one with one.
• Cosigner: A cosigner with solid credit and a stable income can help you get approved for a small personal loan, or possibly help you net more favorable terms. But not all lenders offer loans with cosigners. Additionally, a cosigner becomes responsible for the loan if you miss payments.
• Time to fund: If you have an emergency expense to cover, fast funding is likely 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.
• Company reputation: Before taking out any loan, consider reading customer reviews on sites like Trustpilot or Better Business Bureau.

Check Out: Best Emergency Loans

What is a small personal loan?

While “small” is a relative term, a small personal loan can be thought of as one that's $2,000 or less. Some lenders, like PenFed, offer personal loans less than $1,000. You can get small personal loans from a bank, online lender, or credit union. 

Some credit unions offer even smaller loans, called payday alternative loans (PALs). These may have no minimum loan amount, or a $200 minimum loan amount, depending on the type of PAL, with repayment terms up to 12 months. They're especially suitable if you have bad or fair credit and are already a credit union member (or are eligible to be). APRs on PALs are capped at 28%.

Related: Guide to Personal Loans

Eligibility requirements for small personal loans

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.
• Verifiable income: By proving your income through pay stubs or bank statements, you show lenders that you’re able to pay back your 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 (including rent or mortgage) by your monthly income before taxes. Most lenders like to see a DTI of 35% or less.

Check Out: How To Get a Small Loan

Minimum credit score requirements for small personal loans

Your credit score is based on your payment history, credit utilization, length of credit history, credit mix, and new credit. Each lender looks at your credit score to gauge your ability to pay back a small personal loan, and many have established a bare-minimum credit score number. For instance, Upgrade requires a minimum 600 credit score, while Upstart doesn't have a set minimum (if you apply on its website). Check the lender's minimum credit score requirement before applying.

The FICO credit score ranges are:

• Poor (less than 580): Poor or bad credit can make it difficult for you to get approved for a small personal loan, though it may still be possible.
• 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 and also land 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 small personal loans.
• Exceptional (800+): Exceptional credit opens the door to many small personal loans and could help you land the lowest advertised APR.

Check Out: What Credit Score Do You Need for a Personal Loan?

Pros and cons of small personal loans

Keep these benefits and drawbacks in mind before you take out a small personal loan.

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.

Check Out: How To Improve Your Personal Loan Application

How to apply for a small personal loan

Follow these steps to apply for a small personal loan.

1. 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.
2. 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.
3. Pick a loan option: Choose the loan that makes the most sense for your situation.
4. 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.
5. 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?

Small loan alternatives

Here are other alternatives to a small loan:

• 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 to split a purchase into no-interest payments for six weeks, or sometimes terms of 3 to 12 months with interest. The amount you can borrow depends on the provider. As you make regular purchases with the service, and pay off the loan, some companies may raise the amount you can borrow. Some providers also charge fees, such as late fees. BNPL services may or may not impact your credit. Affirm and Klarna are two providers to consider.
• Borrowing from friends and family: 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

Best small loans FAQ

What can I use a small personal loan for?

Small personal loans are generally flexible. This means you can use them for a wide variety of expenses, including medical bills, car repairs, and vet bills.

Learn More: What Are Personal Loans Used For?

Can I get a small personal loan with bad credit?

Possibly. Some lenders offer small personal loans to borrowers with bad credit. But if you do get approved with bad credit, you’ll likely have a high APR. Consider adding a cosigner with good credit and a stable income to your application. They may be able to help you get approved or get better terms. They're equally responsible for the loan, which means they'll be on the hook if you miss payments. Not all lenders allow cosigners. 

Where can I find a small personal loan?

Banks, credit unions, and online lenders all offer small personal loans. You may want to also consider a payday alternative loan (available from credit unions) or a short-term loan via a cash advance app (if you can avoid cash app fees and can pay the loan back by your next paycheck).

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