The top 1% of wealthy Americans know the power of personal loans. They borrow more than their fair share — in fact, they hold 5% of all personal debt in the country. They’re probably using the cash to buy real estate, but they also shop for private islands and escargot forks from time to time.
Meanwhile, average Americans are using small personal loans to make their lives better. These loans may not get you a private island, but they can help you improve your home, consolidate your debt or recover from financial emergencies.
We’ve reviewed the best small personal loans and to make top recommendations, using our proprietary SimpleScore methodology that evaluates each lender’s rates, terms, customer satisfaction, customer support and fees.
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The best small personal loans of 2020
The best small personal loans at a glance
| Lender | SimpleScore | APR | Loan Amount | Terms |
| Avant | 3.2 | 9.95%–35.99% | $ 2,000–$ 35,000 | 24–60 months |
| OneMain Financial | 3 | 18.00%–35.99% | $ 1,500 – $ 20,000 | 24–60 months |
| Upgrade | 3.5 | 6.99%–29.99% | $ 1,5000 – $ 35,000 | 36–60 months |
| Lightstream | 4.8 | 2.49%–19.99% w/AutoPay | $ 5000 – $ 100,000 | 24-84 months |
| Marcus | 5 | 6.99%–19.99% | $ 5,000 – $ 40,000 | 36–72 months |
| LendingClub | 3.2 | 10.68%–35.89% | $ 1,000 to $ 40,000 | 36–60 months |
| OppLoans | 2 | 99%–199% | $ 500 to $ 4,000 | 12–24 months |
*Rate accurate as of October 2020 and exclude autopay discounts.
Best for Average Credit – Avant
Avant’s small personal loans treat the average borrower like a rock star — perfect for those with credit scores between 660 and 700.
Avant offers small loans with reasonable rates, flexible terms, and a quick, easy path to cash for average borrowers.
Avant rolls out the red carpet for middle-range borrowers, with excellent customer support, a mobile app, and no prepayment fees. Customers with poor credit could pay rates up to 35.99%, but that’s a great deal compared to the 400% APR some lenders charge. Borrowers with excellent credit may be able to get a better deal elsewhere. However, if your credit rating is in the mid- to high-600s, Avant offers one of the best small loan companies for you. Read our full Avant Personal Loans review to learn more.
Best for Emergencies – OneMain Financial
When your bank account springs a leak and you’re drowning in sudden expenses, OneMain Financial is there for you with a life preserver.
OneMain can often get cash in your hand in one day, which could offer tremendous relief in a crisis.
OneMain’s online application process for small loans is quick and straightforward, but you can also apply at one of the brick-and-mortar locations in 44 states. There’s no minimum FICO score for these loans, making this a great emergency option for borrowers with low scores. OneMain Financial uses a holistic approach to evaluate your application, including work history and financial background. Borrowers with a poor credit history will pay higher rates, but the cap of 35.99% is much less than some lenders charge. Read our full OneMain Financial loans review.
Best for Credit Health – Upgrade
Upgrade can help your credit scores graduate with honors to the next level.
Upgrade offers a transparent loan process so borrowers with poor to average credit can improve their scores.
A small personal loan from Upgrade can boost your credit score by improving your credit mix and by moving some of your balances off your credit cards. When you apply for an Upgrade personal loan, you can get pre-approved without a hard pull on your credit report. Speaking of credit, you can also sign up for Upgrade Credit Health and get your credit score, recommendations and insights on how to improve your credit. It’s not just about what your score is before you apply, it’s about what your score could be after you’re done paying your loan. Read our full Upgrade personal loans review.
Best for Good Credit – LightStream
LightStream rewards your good credit behavior with easy cash, low rates and no fees.
Lightstream rewards your good credit with low rates, a smooth loan process, and a $ 100 guarantee.
LightStream’s rates for small personal loans start at just 2.49% with no origination fees, late fees, or prepayment penalties. No matter what rate you qualify for, you can knock off half a percentage point by signing up for automatic payments. The loan process is a piece of cake — you could even get your funds the same day.
The lender will pull a hard credit check, but it also offers a $ 100 guarantee if you decide you’re not happy with your loan. LightStream also offers to beat any competitor’s rate by 0.10%. However, borrowers with FICO scores below 660 will need to choose a different lender. Read our full LightStream personal loans review.
Best for No Fees, Ever – Marcus by Goldman Sachs
If you broke up with your last lender because of high fees, Marcus might be your perfect new lending partner.
No fees ever plus a personalized payment schedule make Marcus Personal Loans a carefree option for borrowers.
Marcus offers competitive rates with no origination fees, late fees, or prepayment penalties — ever. The lender even lets you skip one payment after you’ve made 12 consecutive on-time payments, and you can change your date up to three times during your repayment timeline. When you apply, you’ll see a clear picture of what loan terms and payments are available to you before you apply. The majority of Marcus’s small loans go to borrowers with credit scores over 660, so this probably isn’t the best option for customers with poor credit. Read our full Marcus personal loans review.
Best Peer-to-Peer Lender – LendingClub
If you have good credit and aren’t in a hurry, come party at the LendingClub.
Peer-to-peer lenders remove some of the middleman functions from banking, letting investors loan directly to borrowers as a group. Approval takes a little longer, but this innovative model offers a variety of loans at reasonable rates. That group decision-making process means LendingClub loans can take a week or two to get approved and funded. Borrowers can choose from a wide range of loan purposes, including auto refinancing, medical procedures and small business funding, as well as the usual categories of home improvement, debt consolidation and major purchases. Although people with scores as low as 600 are invited to apply, most successful applicants have scores above 700. Read our full LendingClub review to learn more.
Best for Bad Credit – OppLoans
OppLoans’ products aren’t cheap, but these loans can get borrowers with bad credit off the payday loan merry-go-round.
These loans are expensive, but they offer a solid alternative to payday or title loans.
A 199% APR might look scary, but it’s a huge savings over the average 400% APR of a typical payday loan. Opploans are accessible to borrowers with a minimum income of $ 18,000 and a credit score of 350. Origination fees are usually under 3%, and the late payment fee is $ 10. There’s no prepayment fee, so if a borrower manages to pay off the loan early, they can save a bundle. This loan could be life-changing for anyone trapped in a cycle of taking out payday loans to cover expenses. To learn more, read our full OppLoans review.
What is a small personal loan?
Small personal loans are unsecured loans in amounts ranging from $ 500 to $ 5,000, repaid over a set period of time.
A small personal loan is beneficial for moving high-interest debt off your credit cards, to lower your interest expense and improve your credit score. These loans can also improve your credit mix, which accounts for as much as 10% of your overall score.
How small personal loans work
Most lenders will let you prequalify for a small personal loan without performing a hard credit inquiry into your credit report. This means that the lender will just take a peek at your score and credit health.
[ Read: Secured vs. Unsecured Personal Loans ]
If you decide to proceed, you’ll fill out a complete application and authorize a hard pull of your credit history, which will show up as an inquiry on your credit report. Some lenders can put cash in your bank account the day you apply; others take a week or even two to give you a decision.
APR
Interest rates for unsecured personal loans vary widely, from 5.95% into triple digits. Your credit history is the most significant factor that influences rate. Lenders who are willing to work with high-risk borrowers charge much more in rates and fees than those who only accept clients with good credit scores.
[ More: How to Get a Loan With Bad Credit ]
Be sure when you compare rates that you’re looking at the APR, or annual percentage rate, for both lenders. This figure takes into account all the costs of the loan, including fees, over the entire borrowing period.
Loan amount
Some small personal lenders make loans as small as $ 500, but most have a higher minimum of $ 1,500–$ 2,000.
Since small personal loans are unsecured, your maximum loan amount depends on your income, debt load and credit history.
[ Related: Can Personal Loans Improve Your Credit Score? ]
It’s best to apply for only the amount you need for a couple of reasons. If your credit is borderline, you’re more likely to be approved for a lower loan amount. However, a smaller loan amount means smaller monthly payments.
Terms
Most lenders offer terms ranging from one to seven years, although two to three years is the most common range for small personal loans.
Longer terms give you lower monthly payments, but you may pay less overall with a shorter-term loan. Multiply the monthly payments by the number of monthly to see the total amount you’ll be paying over the life of the loan.
To choose the best term for you, balance the lifetime cost of the loan against the ease of having lower payments.
How to choose the best small personal for you
- Get a sense of your credit score and improve it if necessary.
- Figure out how much you need to borrow. Try to keep your loan amount as low as possible, but make sure your needs are fully covered.
- Make a note of any other special needs you have surrounding your loan. Do you need the funds immediately? Do you need to be able to make payments in person, or can you do it online?
- Look over the lenders who are a good match for your credit score and loan amount. Compare their APRs, terms and fee structures.
- Choose two or three lenders who seem like the best fit for your needs and have the lowest APRs. Visit their websites and check if they offer prequalification without a hard credit pull.
- If so, fill out the form and compare the monthly payments available to you. Add up the total monthly payments to find the most economical lender.
- Once you’ve chosen a lender, fill out the full application form and see if you’re approved.
- If your first choice lender declines you, it should tell you why. Use that information to select a lender who is more likely to approve you
Small Personal Loans FAQs
Yes, but it will be more expensive. Lenders who specialize in making loans to high-risk borrowers charge much higher interest and fees, but you can find better deals than what your local payday loan location offers. A small personal loan can also help you build stronger credit if you make your payments on time.
Very fast! If you apply early in the day, some lenders can deposit the money to your bank account or put a check in your hand within hours. Approvals are often available within seconds after you apply. In some cases, a lender may need more time to evaluate your application.
Many lenders offer small personal loans online or in person. Some of the best options for different circumstances include Avant, OneMain Financial, Upgrade, LightStream, Marcus, LendingClub, and OppLoans. If you have good credit, your bank or credit union might be willing to make a small personal loan for you.
Too long, didn’t read?
Small personal loans are unsecured loans of $ 500–$ 5,000, with terms ranging from one to three years. The rates for these loans can vary from 5.65% to 400%, depending on your credit rating and other factors, with 8% to 35% being the most common range for the average borrower. Fees can make up a large portion of the loan expense, especially with high-risk loans. Customers usually use small personal loans to cover home improvements, debt consolidation, and major purchases.
