If you’re facing an unexpected expense and only need to borrow a little money, small personal loans can be beneficial. (Shutterstock)
If you need to borrow a small amount of money to consolidate debt, pay a medical bill or cover an emergency expense, you may be considering a small personal loan. Smaller loans aren’t likely to earn as much interest for the lender, so not every lender offers them.
But many lenders offer personal loans for amounts of $5,000 or less. Here’s how small personal loans work and where to find them.
If you’re looking for a small loan, Credible makes it easy to see your prequalified personal loan rates from various lenders, all in one place.
A small personal loan is generally considered to be a loan in the amount of $5,000 or less. You can use the funds from a small loan for nearly any expense, including debt consolidation, car repairs, medical bills, or a vacation.
Small personal loans are installment loans. You’ll receive the funds in a lump sum, then you’ll make fixed monthly payments (including interest) toward the balance over a set period of time.
In most cases, small personal loans are unsecured, so they don’t require you to provide an asset as collateral. If you have bad credit you may be able to qualify for a secured loan, which would require collateral, such as your car or a savings account.
If you have little or no credit history, or your score isn’t where you’d like it to be, it may be more challenging to qualify for a small personal loan. Many lenders work with bad credit borrowers, but you’ll pay a higher interest rate to borrow money than someone with good credit.
You can find small personal loans from banks, credit unions and online lenders.
When money is tight, it’s tempting to take advantage of any loan offer you receive. But you should avoid these types of small loans if possible:
If you’re looking for a small personal loan, these 10 Credible partner lenders are a good place to start:
Visit Credible to compare personal loan rates from various lenders, without affecting your credit score.
Small personal loans have advantages and disadvantages to consider before you apply.
Once you’ve decided you’re ready to apply for a personal loan, follow these five steps:
- Decide how much you want to borrow and how much you can afford to repay each month. This will help ensure you don’t overextend yourself.
- The best way to save money when you borrow is to compare rates and terms from multiple lenders to make sure you’re getting the best deal for your situation.
- You’ll want to have your personal information on hand before you apply, including proof of income, address, and identification. If you have a cosigner, you’ll need their information as well.
- Once you’ve chosen the lender you want to work with, complete the application. If you apply online, you may have a decision within a few minutes.
- If you’re approved for a loan, you’ll sign a loan agreement and the lender will disburse your loan funds. Many lenders let you choose your payment due date. Pick a date that works for your budget. You may even be able to save on interest if you opt for automatic payments.
If you’re ready to apply for a small loan, Credible lets you quickly and easily compare personal loan rates to find one that suits your needs.