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How to Get a Small Personal Loan: Best Tips | Beem

Small personal loans are a viable solution when you need to cover unexpected expenses, consolidate debts, or finance a small project. Let’s explore how to get a small personal loan.
How to Get a Small Personal Loan: Best Tips | Beem
Small personal loans can be obtained from various sources, including banks, credit unions, and online lenders. But how to get a small personal loan? Read on to know more.
In this article

In times of financial need, a small personal loan can be a lifesaver, providing quick access to funds without dealing with complex loan applications. In this blog, we delve into the world of small personal loans, exploring what they are, their advantages and disadvantages, how to get a small personal loan, and best practices for repayment. Let’s navigate the path to securing and managing a small personal loan responsibly.

What Are Small Personal Loans?

Small personal loans are a type of financial assistance that offer individuals quick access to relatively modest loan amounts. These unsecured loans mean borrowers do not need to provide collateral (like property or assets) to qualify. Use Beem to get information on personalized rates and explore loan options ranging from $500 to $100,000, without impacting your credit score.

Small personal loans are typically repaid over a short to moderate period, often with fixed interest rates. The loan amounts for small personal loans are usually less than $2,500, making them suitable for:

  • covering unexpected expenses
  • consolidating debts
  • financing small projects
  • meeting medical expenses
  • car repairs

The absence of stringent limitations makes small personal loans practical for addressing diverse financial needs and aspirations. Borrowers can access these funds without strict usage restrictions, making them ideal for handling various personal and financial goals. They provide a convenient solution for those needing immediate funds without the complexities of larger loan applications.

Listed below are some lenders who offer personal loans with various credit score requirements, loan amounts, and estimated Annual Percentage Rates (APRs). Depending on your creditworthiness, you can explore these options to find the one most suited to you.

LenderMin. Credit ScoreMin. Loan AmountEst. APR
Navy Federal Credit Union Personal LoanNone$2507.49-18.00%
OportunNone$30026.86-35.95%
Alliant Personal Loan620$1,00010.49-29.49%
First Tech Credit Union Personal Loan660$5008.99-18.00%
UpstartNone$1,0006.50-35.99%
Upgrade560$1,0008.49-35.99%

Table 1.0. Small Personal Loans with Lender, Min. Credit Score, Min. Loan Amount and Estimated APR.

Small Personal Loans: Pros and Cons

Pros of small personal loans

Quick Access to Funds: Small personal loans offer fast approval and funding, providing immediate access to much-needed funds for various purposes.

No Collateral Required: These loans are unsecured, meaning borrowers don’t need to pledge assets or property as collateral, reducing the risk to personal belongings.

Versatile Use: Borrowers can use the funds for various needs, including emergency expenses, debt consolidation, medical bills, home repairs, or small project financing.

Improve Credit Score: Timely repayment of small personal loans can positively impact credit scores, helping borrowers build or improve their credit history.

Flexible Repayment Terms: Small personal loans usually come with flexible repayment options, enabling borrowers to choose a suitable repayment period based on their financial capabilities.

Cons of small personal loans

Higher Interest Rates: Small personal loans often come with higher interest rates than secured loans or larger borrowing amounts, leading to higher overall borrowing costs. Those with excellent credit are more likely to qualify for a low Annual Percentage Rate (APR). In contrast, individuals with poor credit may face higher rates, possibly up to 36%.

Limited Loan Amounts: The loan principal for small personal loans is less than $2,500, which may need to be sufficient for substantial expenses or significant projects.

Not Suitable for Long-Term Financing: Small personal loans are designed for short to moderate financial needs and may not be ideal for long-term financing or significant investments.

also know about: personal loan myths

How To Get A Small Personal Loan

Now that we have a fair idea of what small personal loans are and how they help, let’s look at how to get a small personal loan. Small personal loans can be obtained from various sources, including banks, credit unions, and online lenders. Securing a small personal loan is a relatively straightforward process. Follow these steps to increase your chances of approval and obtain favorable terms:

Check Your Credit Score

Review your credit report before applying for a loan to identify and resolve any negative items or outstanding debts. Calculate your debt-to-income ratio, which lenders utilize to gauge the portion of your income dedicated to existing obligations. Maintaining a debt-to-income ratio below 40% is advisable, as many lenders prefer. You can keep track of your credit score progress in real-time and receive on-time, detailed reports from the credit bureau using Beem’s Credit Score Simulator.

Compare Lenders

Research and compare different lenders offering small personal loans. Look for competitive interest rates, transparent terms, and excellent customer reviews.

Gather Necessary Documents

Prepare the required documentation, such as proof of income, identification, and address verification. Lenders may also ask for bank statements and employment details.

Apply Online 

Many lenders offer small personal loans online, allowing you to complete the application from home. Online applications often result in quicker approvals.

Evaluate Loan Terms

Carefully review the loan terms, including interest rates, repayment periods, and additional fees. Ensure that you understand all the terms and conditions before accepting the loan.

Loan Approval and Disbursement

If your application is approved, the lender will disburse the funds to your bank account. Be mindful of the loan’s purpose and use the funds responsibly.

How to get a small personal loan
How to Get a Small Personal Loan: Best Tips | Beem 2

How to repay a small personal loan?

Once you know how to get a small personal loan, it’s important to understand that repaying a small personal loan is essential to maintaining a positive financial standing and avoiding any potential negative impacts on your credit score. Here’s how to effectively repay a small personal loan:

  1. Create a Repayment Plan: Develop a clear repayment plan for your budget. Consider the loan term, interest rate, and monthly installments to ensure affordability.
  2. Pay On Time: Timely payments are crucial. Set up automatic payments or reminders to avoid missing due dates and potential late fees.
  3. Make Extra Payments: Make additional payments towards the principal amount. This can reduce the overall interest and shorten the repayment period.
  4. Avoid Skipping Payments: Skipping payments can lead to penalties and adversely affect your credit score. Make every effort to fulfill your payment obligations.
  5. Prioritize the Loan: If you have multiple debts, prioritize the small personal loan to pay it off faster and save on interest.
  6. Communicate with the Lender: If you encounter financial challenges, communicate with the lender. They may offer assistance or alternative repayment options.

With these steps, you can steadily manage your small personal loan repayment and achieve financial freedom. Responsible loan repayment helps build a positive credit history and leads you to better financial health.

Conclusion

Small personal loans can be valuable for addressing immediate financial needs. Applicants should check their credit scores, research lenders, and prepare the necessary documentation while researching how to get a small personal loan. By applying online or in person, borrowers can access quick funding with flexible usage. However, responsible borrowing, timely repayments, and consideration of loan terms are essential to ensure a successful borrowing experience and maintain a healthy financial profile. Beem’s personal loan feature can help you zero in on the kind of loan that suits your requirements best and helps you sail through a financial crunch.

FAQs 

1. What Credit Score Is Needed to Qualify for a Small Personal Loan?

Small personal loans may vary in their credit score requirements, but many lenders accept applicants with fair to good credit scores, typically around 600 or higher.

2. Can I Apply for a Small Personal Loan Online?

Many lenders offer online applications for small personal loans, providing a convenient and efficient way to apply from the comfort of your home.

3. How Long Does It Take To Get Approved for a Small Personal Loan?

The approval process for small personal loans varies among lenders. Some may offer instant approvals, while others may take a few business days to review and process applications.

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Team Beem

Team Beem

Team Beem brings you the latest in the world of personal finance to you. From tips and tricks on how to manage money to how to get cash for emergencies, Beem is your destination for all the information you need to be smart about your money.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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