Small Personal Loans in 2021: Compare Your Options

» MORE: COVID-19: Small loan options and payment relief

Small loans from credit unions

For some borrowers, a local credit union is the best place to get a small-dollar loan. Credit unions are not-for-profit institutions built to serve their members, and many look at more than your credit score when they assess you for a loan.

Many federal credit unions offer payday alternative loans, typically between $200 and $1,000, to borrowers with low credit scores. By law, federal credit unions can charge maximum annual percentage rates of 18% for personal loans and 28% for payday alternative loans.

Borrowers can get a loan from PenFed for as little as $500, depending on the chosen repayment term.

» MORE: How to get a credit union personal loan

Small loans from banks

Not all major banks offer personal loans, and many that do offer larger loans. Citibank and PNC are two banks that offer small personal loans in addition to competitive interest rates and rate discounts for existing customers.

Citibank loans start at $2,000, and customers with Citibank checking accounts can get rate discounts for making automatic loan payments. PNC’s loans start at $1,000, and existing customers receive a 0.25% rate discount if they set up payments from their checking accounts.

In late 2020, Bank of America introduced Balance Assist, a small-dollar loan available in amounts from $100 to $500. It has a low borrowing fee of $5 and a three-month repayment term. You must be an existing Bank of America customer to qualify.

The U.S. Bank Simple Loan lets bank customers borrow between $100 and $1,000, repaid in three monthly installments. The loan carries a fee of $12 to $15, or an APR of 77% - 81%. It's an expensive option, but still cheaper and safer than payday loans.

» MORE: Top banks offering personal loans

Small online loans for bad credit

Borrowers with bad credit (629 or lower FICO) may qualify for a small loan from a reputable online lender. Rates on these loans don't exceed 36%, but bad-credit borrowers may qualify for a rate on the high end of a lender's APR range.

Compare bad credit loans from online lenders to find the lowest rate. Some of these lenders can offer fast funding and they typically have repayment terms of six months or more.

» MORE: NerdWallet's picks for best bad-credit loans

Alternatives to small personal loans

You have options other than taking a small loan with interest and potentially fees. NerdWallet recommends exhausting cheaper alternatives first, even if you need the money for an emergency.

• Seek assistance from local nonprofits, charities and religious organizations.

• Ask your employer for a paycheck advance or use an app like Earnin.

• Get a pawnshop loan secured by something you own.

• Try other ways to make money.

• If you are comfortable with it, ask family and friends for a loan through lending circles or a loan agreement.

Avoid predatory small loans

Payday lenders typically offer loans with high rates, short terms and late fees. A $500 payday loan due in two weeks with the typical fee of $15 for every $100 dollars you borrow would be an APR of 391%, a rate that's considered unaffordable by consumer finance advocates.

Other predatory lenders offer loans for under $1,000 with excessive terms that allow them to earn more interest.

You can spot a predatory lender a few different ways. If a lender doesn’t check your credit before approving you for a loan, requires access to your bank account or doesn’t state the loan’s APR before closing it, then it's likely it isn’t engaging in consumer-friendly lending.

If you can only qualify for a high-interest loan, understand how your rate translates to payments and find a lender that checks your credit.

Learn how to take a high-interest loan without slipping into a cycle of debt before you apply.

» MORE: Alternatives to payday loans

How to pre-qualify for a personal loan

Pre-qualifying for an online loan can get you access to potential loan terms, including the loan’s interest rate, loan amount and payments. Take the steps to pre-qualify and compare offers to find the loan that gives you an amount you need and a payment you can afford.