Best Small Personal Loan Options In 2021

Best Small Personal Loan Options In 2021

Small personal loans are short term and easy to qualify for. They are a quick and highly convenient option for emergencies. You can apply for a small personal loan to cover the following expenses;

  • Car repairs
  • Repair of an important home appliance
  • Medical expenses
  • Tuition fees
  • Purchase of a major appliance
  • For minor home renovations among other things

You can apply for a short term loan if you need quick cash and don’t have an emergency savings account.

Defining a short term loan

According to The Pew Charitable Trusts, affordable short term loans have the following features;

  • Fixed monthly payments with no hidden fees
  • Monthly payment expenses should not exceed 5% of your income per month
  • Have a term ranging from 3 months to 12 months

Online personal loans are available in smaller amounts. Some lenders approve loan amounts of as little as $1000. It is advised to compare multiple options and choose a loan option that you can comfortably pay.

Comparing the best small personal loans in 2021

Lender Minimum credit score APR Best for Rating/5.0
Upgrade 580 6.94 – 35.97% Small personal loans as little as $1000 5.0
Upstart 580 8.94 – 35.99%

 

Small loans as little as $1000 4.5
LendingClub 600 8.05 – 35.89% Small loans as little as $1000 4.0
OneMain Financial None 18.00 – 35.99% Small personal loans from as little as $1500 4.0
Best Egg 600 5.99 – 29.99% Small personal loans starting from $2000 4.0
Avant 550 9.95 – 35.99% Small loans starting from $2000 4.0
Prosper 640 7.95 – 35.99% Small loans starting from $2000 4.5
Rocket Loans 640 7.16 – 29.99% Small loans from as little as $2000 4.0

Our best options for short term loans from as little as $1000

Lender Minimum credit score Interest rate Loan amount Rating
Upgrade 580 6.94 – 35.97%

 

$1,000 – $50,000

 

5.0
Upstart 580 8.94 – 35.99%

 

8.94 – 35.99%

 

4.5
Lending Club 600 8.05 – 35.89%

 

$1,000 – $40,000

 

4.0

Our best options form short term loans from as little as $1500

Lender Minimum Credit score Interest rate Loan amount Rating
OneMain Financial None 18.00 – 35.99%

 

$1,500 – $20,000

 

4.0

Our best options for short term loans from as little as $2000

Lender Minimum Credit score Interest rate Loan amount Rating
Best Egg 600 5.99 – 29.99%

 

$2,000 – $50,000

 

4.0
Avant 550 9.95 – 35.99%

 

$2,000 – $20,001

 

4.0
Prosper 640 7.95 – 35.99%

 

$2,000 – $40,000

 

4.5
Rocket Loans 640 7.16 – 29.99%

 

$2,000 – $45,000 4.0

Short term personal loans offered by credit unions

For smart consumers, a local credit union can be a good starting point if you need a small personal loan.

Credit unions are nonprofit institutions that help members get cash with less-stringent requirements.

The institution looks beyond the applicant’s credit history when approving loan requests. 

What types of loans do credit unions offer?

Federal credit unions specialize in providing payday alternative loans. These are small short term loans ranging from $200 to $1000.

The institution offers loans to borrowers with less than stellar credit scores. A federal credit union is by law required to charge interest of not more than;

  • 18 for their short term personal loans
  • 28% for their payday alternative loans

Short term personal loans offered by banks

Only a few banks offer short term personal loans. A majority of banks these days work with borrowers that need huge amounts of money.

The two main banks that offer short term loans are

PNC

PNC offers short term loans from as little as $1000. Existing customers qualify for a rate discount of up to 0.25%.

Citibank

Citibank can approve loan amounts starting from $2000. Existing customers get rate discounts by allowing for automatic payments.

The bank offers affordable small personal loans. Existing customers can qualify for the loans at discounted rates. 

Other available options

  •       In the last quarter of 2020, Bank of America launched Balance Assist. This is also a small short term loan ranging from $100 to $500.The loan comes with an affordable fee of $5 and a repayment plan of 3 months. One of the qualification requirements is to be an existing customer at the bank.
  •       With the U.S Bank Simple Loan, you can borrow a small loan from 100 to 1000. The money is paid in 3 monthly installments. This loan attracts a small fee of between $12 and $15.This translates to an APR of 77 to 81%. It might seem to be a costly option. But still, these loans are cheaper compared to working with predatory payday loan lenders.

Small personal loans for bad credit

If you have a bad credit score, it is still possible to qualify for a short term loan from reputable lenders.

A low credit score means a fico score of less than 629. These loans come with an interest rate of up to 36%.

But if you have bad credit, your rate is likely to be higher than this. 

How to find affordable loans with bad credit

The trick actually lies in comparing options. Not all bad credit lenders are the same.

By shopping around, you are likely to find a lender who offers the loans at manageable terms. 

Alternatives to small personal loans

If you need fast money, a small personal loan isn’t the only option to go for. There are cheaper options that you can consider for emergency cash. These include the following;

  • Get assistance from charities, local nonprofits, and religious organizations
  • Ask for a paycheck advance from your employer
  • Use any of your assets to secure a pawnshop loan
  • Research other ways to make extra cash
  • Ask for help from friends and family

Payday loans might also be a good option, but what’s the catch?

Payday lenders offer loans with high interest rates. These loans are short-term and failure to pay on time can also lead to rollovers.

All this makes online payday loans difficult to repay. 

Here is an example;

You apply for a payday loan of $500. The loan has a term of two weeks. The fee is $15 for every $100 borrowed. 

The type of loan about can attract an APR of as high as 391%. This is a highly expensive rate that few people can afford. 

There are even payday lenders that offer loans of not more than 1000. But these loans have unfavourable terms.

Payday loan lenders aim to make extra profits for themselves. They don’t care about the borrower’s financial well being. 

How to spot a predatory lender

It is easy to confirm whether an online lender is reputable or not. Here is how;

  • Beware of lenders who do not check your credit when approving loans. 
  • Beware of lenders who require access to your bank account
  • Beware of lenders who do not give clear information on the loan terms and rates

How to find the best loans for bad credit

If you have bad credit, the most important thing is to shop around;

  • Find a lender who can clearly explain the amount you can qualify for as well as your terms and rates
  • Allow the lender to check your credit
  • Learn how to apply for a high interest rate loan without getting into a debt trap

How to pre-qualify for a personal loan

Prequalifying can help you know whether you can qualify for a loan even before submitting your loan request form.

You can know how much you qualify for, the interest rate, fees, and repayment term.

Prequalifying also allows you to compare different loan offers. This will help you make an informed decision when applying for a short term loan online. 

How we came up with the best lenders for short term personal loans

All the lenders on our list offer loans with consumer-friendly features. The lenders offer loans with;

  • No or limited fee charges
  • Soft credit checks
  • Transparent terms and conditions
  • Affordable loan rates
  • Flexible loan repayment options
  • 24/7 access to the lender’s customer support team

Other important factors we considered include;

  • Whether the lender reports consumer information to the major credit reporting agencies
  • Whether there are any complaints filed against the lender with the CFPB

Our list is only inclusive of lenders who offer loans with interest rates of not more than 36%.

This is the acceptable limit when it comes to affordable short term loans. We do not get compensation for this review. 

Frequently asked questions

Are there small personal loans for people with bad credit?

Yes. Some lenders approve loan requests for people with a credit score of as low as 500. You can even prequalify which allows you to confirm whether your application will be approved before applying.

Prequalifying will not have any negative impact on your credit score.

It allows you to know the loan amount and rates that you can qualify for. 

How can I get a small short term loan?

When applying for a short term personal loan, there are three steps that you have to follow;

  • Prequalify. This will help you know which lender can offer the loan at more convenient terms
  • Get all your documents ready. This includes your bank statements and employment documents. You should also have copies of your government-issued ID card, and driver’s license. It is always important to ensure that you avail all the documents required by the lender. This will increase your chances of qualifying for the loan. 
  • The last step is to submit your application. For online applications, it can take as little as 2 hours to apply and get approved.

Where can I apply for a small loan with no credit check?

There are online lenders that also provide no credit check loans. However, these loans come with high interest rates.

If not careful, you might end up in a cycle of debts. It is better to consider the alternatives we discussed above.

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Author: Jay Batson

My Name is Jay has and I have a passion for financial writing. I am the chief writer on this blog. I do my best to verify all the information but if there is anything amiss please let me know and I will do my best to correct it.

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