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Small Personal Loans: Up to $5,000

Small Personal Loans: Up to $5,000; Small personal loans can range from $1000 to $5000. Learn more about small personal loans and find out if small personal loans are for you.
Susan Guillory
Susan GuilloryUpdated August 29, 2022
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Sometimes you need more cash to cover your life expenses than you’ve got in your bank account. You might need money to pay for an unexpected car repair, a surprise medical bill, home improvements, or even debt consolidation.Whatever your need, you’ll probably want to find small personal loans that have low interest and favorable interest rates so that you don’t have to spend more than necessary to get access to that cash. In this article, we’ll talk about small personal loans, how to get them, and what to look out for.

What Are Small Personal Loans?

Small personal loans are loans you take out as an individual that allow you to cover relatively minor expenses like home improvements, moving, or car repairs. You can also use them to consolidate other loans or credit card debt, and if the rate on your small personal loan is less than what you’re paying elsewhere, you may even save on interest. Personal small loans come in varying amounts. Typically, they range from $500 to $50,000, depending on your qualifications and needs.

How Does a Small Personal Loan Work?

Small personal loans work similarly to other types of loans you may be familiar with, like auto or home loans. One significant difference from those two types, however, is that small personal loans tend to be unsecured loans. That means that you aren’t required to provide collateral to secure the loan.Why is that important? In the case of an auto or home loan, the car or property serves as  that collateral. Having collateral reduces the risk your lender takes on by lending to you. Should you not be able to pay back the loan in full, the lender could seize that collateral to cover what you still owe. Secured loans tend to have lower interest rates than unsecured loans and may be easier to get.But back to your unsecured personal loan! You may need to meet certain requirements to qualify for a personal loan, such as a certain credit score, income level, or other metric. When you apply, you’ll typically be asked for your Social Security number, which may be used to check your credit report. If you’re approved for a small personal loan, you’ll be presented with specific loan options, including interest rate, how long you’ll have to pay it back, and the amount you’re approved to borrow.Once you sign your loan agreement, the funds will be deposited to your account. You’ll be required to start making monthly payments on that balance. You may or may not have the option to pay the loan back in full before the loan term is up, depending on your loan agreement.

Why Get a Small Personal Loan?

Taking out a loan will cost you in interest and fees. But there may be certain situations in which it might be worth that expense to get access to a lump sum.If you don’t have savings set aside and you suddenly have an unforeseen expense, how will you pay for it? For example, if your car breaks down and requires a $2,000 repair and you don’t have the money, you might be left without a way to get to work.Taking out a loan could allow you to pay for that car repair, get back on the road, and keep your job.You might also consider taking out a small loan if you have loan or credit card balances in different places. Rather than making, say, four payments on different balances at different interest rates, you could potentially consolidate all that debt into one loan and start making just one payment each month. Ideally, you could pay less in interest for the single loan than you’re paying now on the different balances.

Sampling of Small Personal Loans for 2021

Now you may be wondering, where could I get a small personal loan? There are many lenders that offer small personal loans, and some are more reputable than others (we’ll talk about how you can avoid predatory lenders later in this article). To give you a sample, here’s a list of some of the lenders based on the search “small personal online loans” (as of May 24, 2021).

Rocket Loans

Rocket Loans could be a possibility for quick and easy personal loans. These loans can be used for a variety of purposes, from buying a car to home improvement and loan consolidation. Funds may be deposited as soon as the same day you are approved.Interest rate: 5.97%-29.99%Origination fee: 1-6%Repayment terms: 36-60 months

LendUp

If you’re working to rebuild your credit, here’s an option to consider. LendUp strives to provide affordable ways to help you build your credit and break out of the debt cycle. To that end, LendUp offers what it calls the LendUp Ladder. You earn points by repaying your loan, taking financial literacy courses, and telling others about your loan. Those points help you climb the “ladder” to qualify for larger loans at lower rates.Interest rate: 67.42-68.02%*Origination fee: n/aRepayment terms: 4 months*Fee examples based on California rates. May vary based on location and qualification.

Eloan

Looking for a flexible repayment schedule? Eloan may be a good option. You can borrow up to $35,000 for debt refinancing, home improvement, even tiny house financing. If you have good credit, you may qualify for the lowest rates.Interest rate: 8.99-21.49%Origination fee: n/aRepayment terms: 24-60 months

SunTrust (Now Truist)

Moving away from purely online lenders, there’s also the bank SunTrust, now Truist. SunTrust promises to beat any qualifying rate from another lender and guarantees your satisfaction with the loan experience (or you get $100).Interest rate: 5.95-19.99% (with AutoPay)Origination fee: 2.9%-8%Repayment terms: 24-84 months

Upstart

Upstart gets positive user reviews for its fast and easy application process: 99% of applicants receive their funds one business day after accepting their loans. You can borrow between $1,000 and $50,000 to move, get married, or cover medical expenses, and there’s no prepayment penalty if you decide to pay your loan off early.Interest rate: 7.68-35.99%Origination fee: 0-8%Repayment terms: 36-60 months

How Do I Apply for a Small Personal Loan?

Whether you opt for quick personal loans online or choose to set up a relationship with a local credit union or bank, it helps to prepare by understanding what’s involved when you apply for small personal loan products.Some applications require just a handful of details; some require more. With most, it won’t impact your credit to apply* or see if you prequalify.Usually, you'll be asked for personal details like your name, address, Social Security number, and birth date, as well as your annual income and monthly housing expenses. You’ll then be required to tell the potential lender how much you’d like to borrow as well as what you plan to use the money for.Once your application has been processed, if you’re approved, typically you'll be provided with loan options to choose from and details on what you qualify for in terms of loan amount, interest rate, and repayment terms.After you review the loan documents and sign the agreement, the funds will be deposited into your bank account. Some lenders can even deposit them the day you’re approved.

Reasons to Get a Small Personal Loan

There are many reasons to get a small personal loan. For example, a $5,000 personal loan could be used to cover your expenses to move across the country for a new job, pay for your medical expenses, or help with your dream to adopt a baby.A small personal loan could also be used for:
  • Debt consolidation
  • Home renovations
  • Travel
  • Wedding
  • Car repair
Some lenders may require that you state what you plan to use the funds for, while others will not.

Pros and Cons of a Small Personal Loan

Before you apply for a personal loan, be sure to weigh the pros and cons.

Will a Personal Loan Affect Your Credit Score?

Taking out a loan will almost certainly impact your personal credit score. This score is based on your credit history, which is reported by credit bureaus like TransUnion, Experian, and Equifax. It takes into account much of your financial activity, including any debt you have.A personal loan might actually affect your credit in several ways that the credit bureaus tend to look at favorably. First, if you pay your monthly payment on time, your responsible behavior will generally be reported to those credit bureaus. If you keep your debt-to-credit ratio low (by consolidating credit card debt with a personal loan, for example), that also might have an impact on your score. And once you pay off the loan, that will also probably be reported to the credit bureaus.

Are There Alternatives to Small Personal Loans?

There may be other types of loans you could consider, depending on your situation. If you want to buy a car, weigh the potential benefits of a car loan vs personal loan. A personal loan may have a higher interest rate than a car loan, since it’s typically unsecured debt.If you don’t have a high credit score, you may not qualify for some small personal loans. In that case, you might want to explore small personal loans with bad credit, which may have more relaxed requirements to qualify. You can also look at a bad credit personal loan with a cosigner if you have a partner or family member with good credit who would be willing to help you qualify for a better rate.Credit cards are another option, though they tend to have higher interest rates than loans do. However, if you get one with a rewards program that will give you perks like cash back or travel rewards, and you pay your balance in full each month, you may find it a great option if you occasionally need to make a purchase for which you don’t have cash on hand.

How to Avoid Predatory Small Personal Loans

Unfortunately, there are lenders out there who take advantage of would-be borrowers, particularly those with bad credit. They may make promises like automatic approval or helping you rebuild credit. In fact, they may really offer exorbitant interest rates and fees.Always read the fine print before signing on the dotted line. You need to understand what the interest rate on the loan is, as well as any origination fees or other fees. It’s also a good idea to research reviews for a lender to see what other people are saying. And it may be wise to look at a range of potential lenders so that you have a sense of what kinds of offers other lenders might make.

The Takeaway

In the right situation, a personal loan may be just what you need to reduce your stress about money. Getting one that has conditions that work well for you is key. Do your homework to find the best option and rate to ensure that you don’t pay more than you have to for the loan.You can compare rates on personal loans from top-rated lenders at Lantern. Filling out one simple form lets you access multiple offers from our network of lending partners. 
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)SOLC0421045

Frequently Asked Questions

Can you get a small personal loan with bad credit?
How do I qualify for a small personal loan?
How can I get a small personal loan with no credit?

About the Author

Susan Guillory

Susan Guillory

Susan Guillory is the president of Egg Marketing, a content marketing firm based in San Diego. She’s written several business books, and has been published on sites including Forbes, AllBusiness, and Cision. She enjoys writing about business and personal credit, financial strategies, loans, and credit cards. Follow her on Twitter @eggmarketing.
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