Personal loans come in a variety of sizes and shapes. However the amount you can borrow depends upon several factors, in the kind of lender for your credit rating.
The smallest personal loan you can get might be $100 or less, but tiny loans like this often come with high fees. If you don't have enough in your savings account to cover surprise expense, a small personal bank loan may work for you, but there might be better options.
What's the Least You are able to Borrow Having a Personal Loan?
Each lender offers its very own selection of personal bank loan amounts, and those amounts can differ widely. You'll find unsecured loans from $100 to $100,000, based on the U.S. Chamber of Commerce, though the typical amount you borrow is about $8,000. According to Experian research, the average balance consumers owed on personal loans in 2023 was $16,458 (that could constitute more than one loan).
These amounts have been in the thousands, not the hundreds, because personal loans in many cases are employed for large, one-time purchases and repaid in fixed installments during the period of many years. Common uses for unsecured loans include debt consolidation reduction, medical expenses, home renovation, child adoption or perhaps a wedding.
Finding unsecured personal loans for under $1,000 from popular lenders may be difficult. You might be capable of finding unsecured loans for some hundred dollars at credit unions or community banks, or with secured finance, however these options are less frequent. Most personal loans are unsecured, meaning no collateral is required; the applying is assessed around the applicant's creditworthiness and financial health.
Some alternative lenders, particularly payday loan lenders, provide very small loans of under $1,000, but these aren't considered typical personal loans. Instead, they're very short-term loans with high fees. Because payday loans often result in a cycle of debt, it's often better to consider other options.
Pros and Cons of a Small Personal Loan
Before you pursue a small personal loan, make sure you're aware of the upsides and downsides.
Pros
- Potentially competitive interest rate: Interest rates on unsecured loans are typically less than on charge cards, which can help you save money over the lifetime of the loan.
- Less risk of overextending yourself: Because you're taking on the less of debt than should you took out a large loan, you may be capable of paying it off faster.
Cons
- Fewer choices: Given that very few traditional lenders offer small unsecured loans, you might not have as many options. This makes it harder to shop around for the best rates and costs.
- Faster repayment schedule: Some smaller loans have short terms that need quick repayment. Larger loans, on the other hand, are usually repaid over several years.
- Can be costly: Loans are often intended for financing large purchases whenever you don't have enough savings to purchase outright. There are costs to getting loans, from interest charges to origination fees, and if you are making any late payments, your credit rating can suffer. If you only need a small amount, there might be safer and less expensive ways to access funds.
Alternatives to some Personal Loan
When you have to borrow a tiny bit of money, unsecured loans are far from your best option. Others include:
- 0% intro APR credit card: In case your credit is within very good condition and you can pay off the expense within the introductory no-interest period, think about a credit card having a 0% intro apr. The 0% intro APR periods vary, usually anywhere from nine to 21 months. So long as you can pay off balance before the period ends, you'll get to borrow those funds without having to pay interest.
- Payday alternative loan: Some federal credit unions offer these small emergency loans like a safer, less expensive option to payday loans.
- Family member or friend: This may be a last resort, but for borrowing small amounts, it might be easiest to turn to a trusted loved one. If you're worried about it creating tension in the relationship, consider writing up a promissory note to stipulate the repayment terms and make it feel more official.
- Financial relief options: Some employers, religious organizations and native nonprofits offer short-term financial relief to those in their community; determine whether there are any financial assistance or relief options available to you.
Compare Your Options
If a personal loan seems like the best choice, make certain your credit is in the best shape possible to qualify for low interest rate and good terms. You can check your credit rating and report for free with Experian. You can also save yourself some time when searching for possible lenders by using Experian CreditMatch™ to compare personal loans personalized to your credit profile.