How to Safely Get Small Personal Loans of $3,000 or Less

small personal loans

Almost everyone has those months when the budget gets tight. In times when there are more costs than you can currently afford, small personal loans under $3,000 can help fill in the gaps.

But finding small loans can be tricky since many lenders don’t finance personal loans of that size. Here’s what you need to know before taking out small unsecured personal loans, and where you can find them.

Where to find small personal loans

Many big banks and other major lenders set a minimum borrowing amount of $3,000 for personal loans. Because of this practice, borrowers looking for small loans under $3,000 to help cover short-term costs might have to shop around.

If you know where to look, however, it’s possible to get small unsecured personal loans from a reputable lender.

Find small loans online

Online personal loan providers might be more likely to offer flexible borrowing solutions. There are several top personal lenders that offer small-dollar loans to borrowers. Upstart, and Lending Club all offer loans starting at $1,000; Avant, Prosper and Earnest loans start at $2,000.

Make sure you do a thorough search and compare costs, however, to pick the best online lender for your small dollar loan.

Also, be aware that the balances you’re offered by an online lender might be influenced by your state. Each state has different rules and regulations on lending, which can affect how much you can borrow through an online personal loan.

Get small-dollar loans from credit unions

As not-for-profit organizations, credit unions often provide unique products that give customers wider access to affordable financing. In fact, the National Credit Union Association (NCUA) has set up regulations for payday alternative loans (PAL) — small-dollar loans that provide a less expensive credit option over payday loans.

With payday alternative loans, federal credit unions can offer small personal loans between $200 and $1,000, with repayment terms of one to six months. Under NCUA regulations, interest rates on PALs are capped at an effective 28% APR.

To get a PAL, you must be a member of the credit union for a month or more. Check with your credit union and see if they offer a small-dollar loan that would meet your needs.

If they do, you can complete a small loan application and sign a loan agreement upon approval. Most credit unions will charge a flat $20 fee for originating PALs, so make sure you factor that into your costs.

Try a national bank for small loans

It’s less common among major banks to provide small loans. These types of products are closely regulated and not as profitable as bigger debts, like car loans and mortgages.

Some national banks have options for borrowers seeking small personal loans, however.

PNC Bank, for instance, offers small unsecured personal loans with starting principals as low as $1,000. That’s the lowest starting balance offered by any of the major banks.

TD Bank offers a TD Express Loan which starts with balances of $2,000. A loan application can be processed, approved, and funded within two days, according to TD Bank’s advertising. The bank does require average credit or above (a 680 score or higher) to qualify for this loan type.

CitiBank also offers small loans, with offered balances as low as $2,000. However, you’ll typically need to already be an established Citi customer to meet the bank’s requirement for the loan.

US Bank and Wells Fargo offer small personal loans with balances that start as low as $3,000.

Small loans to avoid

Unfortunately, borrowers of small-dollar loans are often in dire need of financing and have few other options for borrowing cash. Because of this, small loans are the bread and butter of predatory lenders.

Skip payday loans

When shopping for small unsecured personal loans, it’s best to skip options like payday loans, car title loans, cash-advance loans, or similar products. These often carry high interest rates up to 500% APR or more and pile on fees that are often buried in the fine print.

Watch for hidden fees

Affordable loans are usually defined as those that keep rates under 36% APR, according to the Consumer Financial Protection Bureau. However, you might find yourself paying a much higher effective APR than your stated interest rate through unclear fees and shady terms hidden in the fine print.

Lenders might advertise a nominal interest rate, counting on borrowers to mistake it for an annual percentage rate. Or there could be add-on costs like origination fees, extension charges, or even prepayment fees that add to the cost.

The good news is that the CFPB is currently working on lending regulations that would protect borrowers from these hidden fees. In the meantime, make sure you read your loan’s fine print and understand the costs. Failing to do so is a major personal loan mistake.

Get a smart repayment plan

To keep small loans affordable, you also need to pick a repayment plan you can keep up with. Make sure your lender offers minimum repayment periods of 90 days. Less than that is a sign of predatory lending practices in the vein of a payday lender.

Avoid balloon payments, which start small and get bigger as you go. These are another sign of predatory lending. Instead, get an installment loan with fixed payments. This way you’ll always know what you owe each month.

Overall, small personal loans can be a smart way to finance gaps in your monthly budget. In many cases, they’re more affordable than other borrowing options like credit cards.

Whether you choose an online lender, credit union, or major bank, make sure your small loans provider is reputable and provides favorable and affordable terms.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2017, the one-month LIBOR rate is 1.23%. Variable interest rates range from 6.02% – 15.97% (6.02% – 15.97% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms and presence of a co-applicant. Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with Citizens Bank at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, Citizens Bank checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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