Updated
May 09, 2023 Mortgages and car loans serve specific purposes, and large personal loans can cover major expenses, like home renovations and high medical bills. But what if you just need a few thousand dollars?
Small personal loans—typically between $1,000 and $5,000—are a great way to cover expenses just outside your budget. You might take out a small personal loan to consolidate debt, cover an emergency vet bill, pay for an unexpected car repair, or even fund a wedding or vacation.
Compared to high-interest credit cards, personal loan APRs can be more manageable. And depending on the loan term (i.e., the length of the loan), monthly payments can be quite low. Below, we’ll cover the hallmarks of the best small personal loans and tips for qualifying.
In this guide:
- What makes a personal loan small?
- How to identify the best small personal loans
- The best small personal loans for $1,000 to $5,000
- Can you get a personal loan for less than $1,000?
- Who can qualify for a small personal loan?
- Alternatives to small personal loans
- Small personal loan options to avoid
- FAQ
What makes a personal loan small?
Personal loan limits often reach or exceed $100,000, though you’ll need a strong credit score to qualify. If you’re still working on improving your credit score and don’t need that much cash, many personal loan companies offer options as low as $1,000.
Small personal loans between $1,000 and $5,000 are ideal for tackling high-interest credit card debt, paying for small home renovations and repairs, and covering unexpected medical costs. In some cases, you may not even need $1,000 and can look for lenders offering smaller loan amounts.
To determine how small of a loan a specific lender offers, check out its website. Lenders typically advertise personal loans “starting at” a certain amount. Find options that start at $1,000 or $2,000—lenders whose loans start at $5,000 or more won’t have what you need.
But it takes a lot more than the right loan amount to make the option a good fit for you. Below, we’ll analyze what makes the best personal loans stand out from the rest.
How to identify the best small personal loans
When shopping around for a small personal loan, you’ll need to compare more than just loan amounts—though that’s a good place to start. Here’s everything you should consider when selecting the right loan for your needs.
Credit score requirements
The top consideration when looking for a personal loan should be credit score requirements. If your score is below a lender’s minimum requirement, it’s not worth your time to research further—and it’s certainly not worth applying.
In general, you’ll need a credit score in the mid-600s to qualify for the average personal loan, no matter the loan amount. A score in the mid-700s or above will yield the lowest rates and best terms.
Struggling with credit? The best small personal loans for borrowers with good credit won’t be available to you, but you can still find personal loans designed for borrowers with lower credit scores. Just expect higher fees and less favorable rates and terms.
On the bright side, responsibly managing your personal loan with on-time payments can help improve your credit score. That way, you’ll be better positioned to qualify for the best loan offers—whether personal, auto, or even mortgage—the next time you’re ready to borrow.
Loan amounts
Not every lender offers small personal loans. When comparing personal loan companies, look for the minimum loan amount offered.
If you only need $1,000 but a lender’s minimum is $2,000, it’s often not worth it to take out a larger loan than you need. Instead, keep searching for options with smaller minimum amounts.
Fees
Some personal loans come with fees. You might pay late fees if you miss a payment, or you may pay a prepayment penalty for paying off the loan too early.
More common are origination fees. These are usually a small percentage of the loan amount that covers the underwriting and processing. Think of it as the cost of getting the loan. Not every personal loan will have these.
In many cases, it’s better to find a no-fee personal loan, though there could be instances where a loan with an origination fee is actually cheaper than a no-fee loan—if the no-fee loan has a significantly higher interest rate.
A note on fees
Before applying for a loan at a specific amount, research how the company handles origination fees. In many cases, lenders deduct the origination fee from the loan amount.
That means if you need $1,000 but the lender charges a 5% origination fee from the loan amount, you’ll only receive $950—and you’ll be $50 short of what you need. Either avoid lenders that collect fees this way or request a larger loan amount to accommodate the fee.
APR (and interest rate)
While many use the terms “interest rate” and “APR” interchangeably, there’s actually a crucial difference between the two.
Interest rate is one component of an APR on a personal loan. While both are reflected as percentage rates, your APR also accounts for any fees assessed for administering the loan, such as origination fees.
When comparing small personal loans, make sure you’re looking at the APRs for any you’re considering. This will give you a better picture of the annual cost of the loan so you can make a more informed decision.
Lenders sometimes advertise their APRs with an asterisk. When you look closely, you’ll see that the rate includes the autopay discount. If you don’t intend to take advantage of autopay (though you should!), your rate will be higher.
Repayment terms
With a personal loan as small as $1,000, it might be easy to pay it off in two or three years. You’ll pay less in interest if you opt for a shorter loan term.
Still, you know your monthly budget better than anyone else. A longer loan term may be more expensive in the long run, but it keeps monthly loan payments lower, which you might find more manageable. Find a lender that offers the loan terms that work best for you.
Wondering how repayment terms, loan amounts, fees, and APR impact your monthly payment? Use our personal loan calculator to see how these changing variables affect your cost.
Other important considerations
Clearly, finding the right personal loan can be tough work, but there’s even more you should pay attention to when finding the right small loan for you:
- Funding time: How quickly do you need the loan? Some lenders offer same-day funding, while others may take a day or more to process the application and fund your bank account.
- Prequalification: Many lenders now prequalify you online without impacting your credit score. Prequalifying for your top loan choices is a good way to compare offers side by side.
- Usage restrictions: You can use a personal loan for almost anything. That said, most lenders will restrict you from using a personal loan to start a business or fund your education. Read the fine print carefully to understand what you can use a personal loan for before applying.
- Other requirements: In general, you’ll need to be a U.S. citizen with a government ID to get a personal loan. Some lenders may have income requirements while others may only be available in certain states.
The best small personal loans for $1,000 to $5,000
Now that you know what to look for in a small personal loan, here are the four best small personal loans if you need to borrow from $1,000 to $5,000.
Best overall for small loans: Upgrade
Personal loan
- Competitive rates
- Personalized loan recommendations
- Fast funding
Upgrade is our top choice for small personal loans. You can easily apply online, and funding usually takes a single business day.
Though rates start as low as 8.49%, Upgrade is also available to borrowers with fair credit—they’ll just pay a higher APR.
If you’re using a small personal loan to build your credit score, you’ll also appreciate the tools that Upgrade provides borrowers: free credit monitoring, fraud alerts, and educational resources to help you on your credit journey.
- Recommended credit: 580
- Prequalify with a soft credit check: Yes
- Rates (APR): 8.49% – 35.97%
- Loan amounts: $1,000 – $50,000
- Repayment terms: 24 – 84 months
- Funding time: As fast as 1 business day
- Disclosed fees: 1.85% – 9.99% origination fee
Best for changing payment date: LendingPoint
Personal loan
- Payment flexibility
- Available to borrowers struggling with credit
- Fast funding
LendingPoint uses proprietary technology to look at your whole financial picture, not just your credit score. That makes LendingPoint a good option for borrowers with fair credit who need a small personal loan.
The online application is easy, funding is fast, and you can even change your payment due date to accommodate for things like a new job with a new payday. The major downside is the minimum loan amount is $2,000; if you need $1,000 or less, look elsewhere.
- Recommended credit: 585
- Prequalify with a soft credit check: Yes
- Rates (APR): 7.99% – 35.99%
- Loan amounts: $2,000 – $36,500
- Repayment terms: 24 – 72 months
- Funding time: As fast as 1 business day
- Disclosed fees: 0% – 8% origination fee
Best for a secured loan: Best Egg
Personal loan
- Competitive rates
- Looks at more than just credit score
- Secured personal loans available
Best Egg is available to borrowers with fair to good credit. Homeowners who want to avoid a home equity loan for smaller projects can even take out a secured personal loan for things like fixtures and cabinets.
A secured loan means collateral, such as your auto, or bank or investment accounts, is added to the loan. If you default, your collateral can be seized.
Rates are competitive for borrowers with good credit, but the repayment terms are a little tighter than other small personal loans on this list. Customer experience is top-notch at Best Egg, and the website is easy to navigate and use.
- Recommended credit: 640
- Prequalify with a soft credit check: Yes
- Rates (APR): 8.99% – 35.99%
- Loan amounts: $2,000 – $50,000
- Repayment terms: 36 – 60 months
- Funding time: As fast as 1 business day
- Disclosed fees: 0.99% – 8.99% origination fee
Best for thin (little-to-no) credit: Upstart
Personal loan
- Available to borrowers with poor credit
- Fast funding
- Easy application process
Borrowers with poor credit who need access to a small personal loan have a good chance with Upstart. Upstart relies on more than just credit score, analyzing things like education and employment to make an approval decision.
Rates can be as low as 6.70%% for borrowers with excellent credit (and origination fees may not apply in that case). If you have poor credit, however, expect high fees and rates.
While we appreciate the fast funding and easy-to-use website at Upstart, just note that loan terms aren’t flexible. You either commit to three or five years to repay the loan, which may be longer than you need for a small loan amount.
- Recommended credit: 580 (depending on where you live)
- Prequalify with a soft credit check: Yes
- Rates (APR): 6.70%% – 35.99%%
- Loan amounts: $1,000 – $50,000
- Repayment terms: 35 or 60 months
- Funding time: As fast as 1 business day
- Disclosed fees: 0% – 8% origination fee
Can you get a personal loan for less than $1,000?
Our list of the best small personal loans focuses on loan amounts between $1,000 and $5,000, but what if you don’t need that much money? In those cases, we might recommend some alternatives, like family loans or using your emergency fund.
That said, it is possible to get a personal loan for $500. In some cases, you can get loans for as little as $250 or even $100. Your best bet is going to a local bank or credit union to find a loan of that size.
Here are a few personal loans that start at less than $1,000:
- U.S. Bank offers its Simple Loan as low as $100.
- Navy Federal Credit Union offers small personal loans starting at $250. You will need to be a service member (or an immediate family member) of the U.S. Armed Forces, a veteran, or a Department of Defense employee to be eligible to join.
- PenFed offers small personal loans starting at $600.
Who can qualify for a small personal loan?
In general, you need at least a fair credit score to get a personal loan, no matter the size. Many lenders require a credit score in the mid-600s, but you’ll need good or excellent credit to get the lowest rates.
Applying for a small personal loan can make it easier to get approved. A smaller loan amount means a smaller monthly installment, which signals to lenders that you’re more likely to be able to keep up with payments.
That said, there are lenders with personal loans for borrowers with bad credit. These loans typically have higher fees and APRs. Loan amounts are usually smaller as well, but if you’re already specifically shopping for a small personal loan, this shouldn’t be a problem.
Your credit score isn’t all a lender will consider when reviewing your application. Personal loan companies may also look at your:
- Income
- Outstanding debts
- Employment history
- Education
Some lenders offer small, secured personal loans. In those cases, you can make up for a lower credit score by providing some kind of collateral, like jewelry, your car, or even your savings account.
Requirements will vary by lender, but to get a personal loan, you’ll need to be a U.S. citizen or permanent resident. While a lending institution may offer prequalification, you may have to supply specific personal loan documentation to get approved, such as:
- Government-issued ID
- Proof of income
- Proof of address
Alternatives to small personal loans
Small and short-term loans aren’t your only option if you need a little extra cash. Here are a few other choices you might consider.
0% APR credit card
We generally don’t advocate taking on credit card debt, as credit cards come with high interest rates and ultimately cost more in the long run.
If you can find a 0% APR credit card, though, it can be a smart way to cover smaller costs when times get tough. Just make sure you pay off your debt before the no-interest period ends.
Even if the card’s 0% annual percentage rate lasts a full year, ensure you can theoretically pay it off in six to nine months. If you fall behind and exceed the one-year intro period, you could suddenly find yourself struggling with mounting credit card debt.
Cash advance apps
If you just need a little bit to get you by until payday, cash advance apps like Brigit or EarnIn may be viable options. These let you borrow cash from upcoming paychecks.
You likely won’t encounter any interest charges with cash advance apps. Instead, you might pay a monthly membership fee, a fee for fast funding, or an optional tip.
You may also be able to get a cash advance through your credit card at an ATM or financial institution. Make sure you understand what fees are involved before heading to the bank.
Buy now, pay later apps
If you’ve ever bought a new couch or an iPhone but paid for it in installments over a set number of months, you’ve engaged in the “buy now, pay later” (BNPL) process.
In recent years, a number of apps have emerged allowing consumers to finance their purchases through a similar process. Popular buy now, pay later apps include Affirm, Sezzle, and Afterpay. Even PayPal’s in on the BNPL game with Pay in 4.
Family loan
When you only need to finance something small—like urgent car repairs, a pet’s vet bill, or the rent payment—until your next paycheck, it may not be worth the fees and interest to take out a small personal loan.
If you have a willing family member or friend, asking if you can borrow the money never hurts. But keep in mind: borrowing money from loved ones can be tricky.
To protect the relationship, ensure the loved one knows you understand if they say no. If they say yes, prioritize repaying the loan in full as soon as you can.
Small personal loan options to avoid
The alternatives to small personal loans discussed above may make sense for your financial situation—and there’s nothing inherently wrong with them. The small personal loan alternatives below, however, are options you should avoid at all costs.
Title loans
Title loans allow you to use your car, motorcycle, or boat title as collateral and borrow cash against it. For many, it seems like an easy way to get cash when you need it, but it also puts your property at serious risk.
If you don’t pay off your loan within the specific period (usually 15 to 30 days), the lender can seize your vehicle. Title loans also come with extremely high interest rates and can lead to an ongoing cycle of debt if you’re not careful.
The takeaway? Title loans are expensive, can land you deeper in debt, and could even result in the loss of the vehicle you need to get to work and earn money.
Payday loans
Payday loans are a type of predatory loan that you should avoid at all costs. These offer small lump-sum loan payments you agree to repay once you receive your next paycheck (or pension or Social Security check).
But here’s the problem: Payday loans often come with sky-high interest rates—sometimes reaching 1,000% APR—making them impossible to repay. You might have to take out another payday loan to repay the first one. This can lead to a vicious cycle of debt.
Payday loans are not permitted in every state.
FAQs
How does a small personal loan impact my credit?
Applying for a personal loan of any size typically results in a hard inquiry on your credit report. This negatively impacts your credit score temporarily, but the hard inquiry will eventually fall off.
As long as you make on-time payments, your small personal loan could improve your credit score. That’s the strategy behind some of the best credit builder loans—personal loans designed for people hoping to improve their credit score.
What is the smallest personal loan you can get?
Small personal loans typically start at $1,000, but you may be able to find even smaller loan amounts through a local bank or credit union.
As of April 2023, Navy Federal Credit Union offers small personal loans starting at $250, and financial institutions like U.S. Bank and Truist have even smaller options.
Are small personal loans more or less expensive than larger loans?
Because the interest rate on a personal loan is a percentage of the loan amount, larger loans tend to be more expensive than small personal loans. Many lenders also charge an origination fee for personal loans—again, a percentage of the total loan amount—which can make larger loans more expensive.
In theory, the larger the loan amount, the harder it may be for a person to repay it, as monthly payments will likely be higher. In that sense, it may be easier to miss payments and incur late fees with a larger loan as well.