Best Small Personal Loans

Small personal loans are worth checking out if you need access to some cash but you want to avoid overborrowing. With anywhere from $1,000 to $10,000 in funding in your account, you can pay for a vacation, consolidate outstanding debts you have, or pay for a necessary medical procedure. Our team of financial experts reviewed and ranked more than 30 online lenders to help you get the funding you need, so read on to discover our top picks.

If you're angling to get a small loan, you should know that a variety of companies offer personal loans in amounts as low as $1,000. Still, there are additional factors to consider in addition to your loan amount, including rates, fees, company reviews, and more.

• Loan features: Compare the best small loans online based on the amounts you can borrow and the available repayment plans. Use a loan calculator to see whether the monthly payment for the loan you want makes sense for your budget and your goals.
• Interest rates and fees: Compare lenders based on the interest rates they charge, and see if you can check your rate without any impact to your credit score. Also look for loan fees that could impact your borrowing costs, including origination fees or prepayment fees.
• Application process: Find out what you need to apply online, and look for lenders that make it easy to fill out the loan application from the comfort of your home.
• Qualification process: Find out about minimum qualifications each company has, which they may or may not be transparent about. These may include a minimum credit score, a minimum income, and more.
• Customer support: Look for companies that offer several ways to contact them, from phone support to email assistance or online chat.
• Online user reviews: Read the reviews of past users on websites like Trustpilot and the Better Business Bureau (BBB), and look for companies that have mostly positive testimonials.
• Perks and Bonuses: Check whether loan companies offer any extra benefits, like auto-pay discounts to refer-a-friend programs.
  

Best Small Personal Loans of 2022 - Full Overview

We compared more than 30 top online lenders to find the best small personal loans of 2022. The lender reviews below explain more about each company's offerings, as well as their pros and cons.

What is a Small Loan?

A small loan is typically considered any loan for less than $5,000. However, the best small loans online are frequently offered in amounts as low as $1,000.

If you only need a small amount of funding, this part of the loan process is important to consider. After all, you don't want to be forced to borrow more than you need for your goal, whether that's debt consolidation or financing a large purchase.

Reasons to Get a Small Personal Loan

There are myriad reasons to get a small loan, including the following:

• Debt consolidation: If you have high interest credit card debt to consolidate, a small personal loan could help you pay it off with a lower interest rate.
• Surprise bills: Get the cash you need to pay for surprise bills you weren't able to plan for ahead of time.
• Car repairs: Use a small personal loan to pay for new brakes or new tires for your car, then pay off the cost over time with fixed monthly payments.
• Wedding expenses: Cover wedding expenses like your cake or dress with a small personal loan.
• Vacation: Use your loan funds to pay for the vacation you desperately need, whether you want to visit family or friends or enjoy a trip to a far-flung locale.
• Budgeting issues: Free up some wiggle room in your budget with a small personal loan, then pay your loan amount off over time.

How Do Small Personal Loans Work?

Small personal loans come with fixed interest rates, fixed repayment terms and fixed monthly payments that will never change. Once you're approved, you get a lump sum of cash you can spend however you want.

Also note that personal loans are unsecured, meaning you don't have to put down any collateral to apply.

How to Get a Small Personal Loan?

Although the steps involved in getting a small personal loan vary from lender to lender, there are some general rules of thumb to be aware of. Consider these moves as your roadmap to get the small loan you need.

• Step 1: Decide how much you need to borrow, and don't feel obligated to take out a larger loan than you actually need.
• Step 2: Compare loan companies to see which ones offer the loan amount you prefer, whether that's just a $1,000 dollar loan or up to $10,000 in funding.
• Step 3: Check your rate online with at least three or four personal loan companies. This way, you can see how several companies stack up.
• Step 4: Look closely at lenders and offers based on their interest rates, fees and loan terms. Watch out for hidden fees like origination fees.
• Step 5: Decide which lender suits your needs best, and move forward with the full loan application.
• Step 6: Fill out the application with your full contact details, Social Security number, and employment data and more.
• Step 7: See if your loan has been approved, which could happen in a matter of hours or several days.
• Step 8: Send any additional documentation your lender asks for in order to get final approval.
• Step 9: Receive your loan funds electronically in your bank account.
• Step 10: Begin repaying your loan based on the terms and conditions you agreed to.

Where to Get a Small Personal Loan?

There are many places to get a small personal loan, and the best choice for you depends on your needs and goals

• Online Lenders: Small loans online are easy to apply for, and you can complete the full application process from the comfort of your home. Because online lenders don't have a building to pay for, they typically offer the best rates and terms on the market today.
• Traditional Bank: Traditional banks also offer personal loans, and often with competitive rates and terms. Make sure to compare loan offers from online lenders before you go with a traditional bank.
• Credit Union: Credit unions also offer small personal loans, although you typically need to be a member to qualify. Because credit unions are member-owned, they typically offer very low rates and fair terms to qualified borrowers.

Small Personal Loans To Avoid

While there are many high-quality small personal loans to consider, there are some loans you should avoid at all costs. Loans you should steer clear of include the following:

• Payday loans: Payday loans let you use your next paycheck as collateral, yet their loan costs can be exorbitant. According to the Consumer Financial Protection Bureau (CFPB), the fees on payday loans often amount to an APR of almost 400%.
• Auto title loans: Car title loans let you use your car as collateral, and you typically have to repay within 30 days. The Federal TradeCommission (FTC) notes that the fees on auto title loans can work out to nearly 300% APR.
• 401(k) loans: Try to avoid borrowing against your 401(k) or other retirement plan if you can. Not only will you pay fees and interest charges to do so, but you'll lower your chances at retiring when you want to.
• Credit card cash advance: You can take cash out of an ATM with many credit cards, but that doesn't mean you should. Cash advances require upfront fees and high interest charges, and they don't come with a grace period.

Alternatives to Small Personal Loans

While you should avoid the small loan options we just discussed above, there are some decent alternatives to small personal loans out there. Consider these options before you borrow money for debt consolidation, unanticipated bills, or any other reason.

• Home equity loans: Similar to personal loans, home equity loans come with fixed interest rates, fixed monthly payments, and a set repayment schedule that will not change. These loans use your home as collateral, so they will not work for you unless you're a homeowner who has considerable equity to rely on.
• Home equity lines of credit (HELOC): HELOCs also rely on home equity as collateral, and they serve as a line of credit you can borrow against. Unlike home equity loans, HELOCs typically come with variable interest rates.
• 0% APR credit cards: If you want to make a few purchases and pay them off over time, you can also consider 0% APR credit cards. Many let you avoid interest on purchases for up to 21 months, and some even offer rewards on your spending.

Conclusion

The best small personal loans let you access the cash you need, and you don't even have to have a concrete reason to apply. Once approved, your loan funds will be transferred directly to your bank account where you can use the cash to pay bills or splurge for something you want.

Before you pick a loan company, however, you should compare the best online lenders based on their interest rates, fees, terms, and repayment plans. Also consider using a personal loan calculator so you can find out what your monthly payment might be.