Small Personal Loans

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Life costs money, whether we actually have it at hand or not. In an ideal world, we would always have an emergency savings pot, however, in most cases that is simply not possible or even realistic. It's very common to have needs that go out with our current budgets and that's exactly where small personal loans come in.

The availability of small personal loans means that smaller expenses don't have to spiral into bigger problems. Personal loans allow you to make a payment now and then spread the cost over a suitable period of time with added interest.

Often used in place of credit cards, personal loans lend themselves well to countless situations. Using a small personal loan can even improve your financial situation. They can be a clever way to arrange debt consolidation for yourself as well as a brilliant way to build your credit score and establish a foundation for longer-term lending options later in life. In some circumstances taking out a small personal loan can actually help you save money long term.

While they are often thought of in terms of larger expenses such as buying a new car or spreading the cost of a wedding they are also handy when it comes to smaller expenses such as home repairs, car repairs, or surprise vet bills and the likes. . .

The 'In's and Outs' of Small Personal Loans

There's no set or official definition for a small personal loan, simply put its money that you borrow for an agreed amount of time.

Personal loans are installment loans, once your application is approved you will receive the loan amount in one payment, usually on the same business day. You can then spend the credit as you need while repaying a fixed amount every month until the loan has amount has been paid off. An interest fee is added on top of each monthly repayment.

These small cash loans can refer to several financial products from a small loan amount of less than $1000 for one month to a $5000 loan amount for three years. It is unlikely that you will find a personal loan for more than $5000 and some lenders also offer a minimum amount, meaning that you may have to borrow at least $1000.

It is possible to find small personal loans for less than $1000 so make sure that you shop around to find the perfect loan for your personal circumstances.

Here at Loanza, we recommend against borrowing more than you need, while it may be tempting to take out a higher amount when it becomes available, remember you also have to pay the interest rate back!

Secured Small Personals Loans V Unsecured Small Personal Loans

Small personal loans are generally 'unsecured' which means that you don't have to back them with collateral. While it is unlikely that you will be asked to secure a small personal loan, we will cover the difference just in case...

Secured Loans

When you secure a loan, you tie it to something valuable that you own, like your home or car. If you default on your agreed payment terms as well as encountering a late fee every time, as a last resort the lender is entitled to claim your collateral as their own. Secured loans are usually for a very considerable amount of money. Another reason why you may choose a secured loan, as well as an increased loan amount is that it may allow you to take advantage of a lower interest rate or give you access to amounts that wouldn't usually be available for you to borrow due to your credit score. When taking out a secured loan you should be confident that you can repay the loan amount as agreed or it is simply not worth the risk. A secured loan backed by something you own is typically cheaper, but you can lose the asset if you default. Most lenders will only posses your property as a last-ditch attempt at recovering losses and protecting their interests. It's always safer to avoid securing a loan if you can avoid doing so.

Unsecured Loans

Unsecured loans are when you take out a loan without tying it to your existing assets. If you fail to pay, there will be consequences such as a late fee, but you won't be at risk of losing your home or car. Instead, you will suffer from poorer a credit score, unfavorable credit history, any penalty fee you agreed in your contract as well as the and as the applicable late fee. Short term loans are not usually secured because generally, these loans are for lesser amounts of credit over a short period. Because the loan is unsecured, they can come with higher interest rates attached. A secured loan backed by something you own is typically cheaper, but you can lose the asset if you default. All things are considered it's best to opt for unsecured finance where possible. You never know what's around the corner so try to stay on the safe side.

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Why Would I Need A Small Personal Loan?

Personal loans are appropriately named, when you borrow the money it is completely up to you what you choose to spend your small loan on. People take out personal loans for all sorts of reasons there is no end to reasons why people need to borrow money in this day and age. As part of the online application, some lenders may enquire as to the reason for your loan but many won't, and it shouldn't impact the success of your application. If you are asked, chances are it's for market research purposes. Here are some common examples of situations where you may wish to consider the use of personal loans:

Debt Consolidation

Personal loans can be a very effective way to manage existing debt. By consolidating existing debt and monthly payments into one manageable monthly repayment borrowing money could save you money. In this situation, you should ensure that your choice of loan has a lower interest rate than your existing debts. For exampled a borrower with a relatively good credit score could take out a personal loan to pay off the balance on two credit cards with high-interest rates. This could allow them to save money on the interest as well as improving their credit score and credit history by paying off their outstanding balances early. To effectively use personal loans for debt consolidation, it is important to stick to your plans, pay off all existing debt and then make your agreed month;y payments until you are debt-free.

Home Improvements

Taking out a loan for home improvements could be necessary for many reasons, perhaps your bathroom is falling apart or your kitchen is outdated. Of course, home improvements can often be a necessity if somethings stops working altogether. Thankfully, if done right, home improvements could add value to your home so taking out a small personal loan to redecorate before you sell up could work out to be a crafty way to make money long term.

Emergency Payments

Unfortunately, life can throw things at you and the need for a loan becomes a necessity as opposed to an option. You can be minding your own business one minute and be in a financial crisis the next. Maybe you will encounter unexpected home repairs or medical bills, perhaps your pet will become unwell and cost a fortune at the vet. Your car could break down and fail to come back to life. Small loans can save the day in the event of life's emergency. Some things are simply more important than money and we have to what we can to manage at that moment in time.

Life Events

Life is expensive. The amount of money that we are expected to spend just to exist and live our lives can be outrageous at times. Perhaps you have been saving for something and haven't quite been able to reach your goal and can't wait any longer. Perhaps you want to get married. Maybe you want to enroll in night school to learn something new or improve your skills in something you are passionate about. It's perfectly natural to want to achieve certain things and sometimes our finances hold us back. In some cases, a short term qualification can help you earn a long term promotion. It's never recommended to borrow money for luxury or perhaps unnecessary items such as clothes, events, or annual holidays, and it is irresponsible to use loans to live outwith your means. However, there may be occasions where you can bend the rules a little. There are certainly occasions where its understandable to explore personal loans for your needs, even if they aren't exactly an 'emergency'. If you are willing to cover the cost of the interest and are confident that the repayments are manageable then there's no harm in researching loans for personal circumstances. Please remember that paying for non-essential purchases this way is far more expensive. The better way to do things so do save up, be patient, and then you can avoid the additional fee altogether. Remember saving monthly will be just like your monthly payments but far less expensive because there is no big interest fee on top. If you can hold off, do hold off.

Can I get a Small Personal Loan With a Poor Credit Score?

The short answer is YES. You can qualify for small loans with a poor credit score. Many lenders make their decisions based on factors including credit score, credit report, and income to debt ration.

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Where Can I Get A Small Personal Loan?

These are loads of loan options on the market these days, in fact, the online loan market is saturated. Spending five minutes online you will find yourself presented with countless promises of small loans from countless lenders. Thankfully Loanza is here to help you cut through the noise. The three main providers of personal loans are banks, credit unions, and online direct lenders. Let's take a closer look at each!

Traditional Bank

Some major banks offer personal loans although most will only handle larger loan amounts. If your lucky your existing bank might offer small loans with competitive interest rates for existing customers. If your credit score is poor or you have a questionable credit history then online might be a safer bet for you. Similarly, if time is of the essence applying online might be a better bet. Online loans can help you receive the loan amount on the same business day whereas the process with a regular bank could take between 3- 10 days.

Credit Unions

If you are a member of a credit union, chances are that they will have some personal loans available to apply for. A local credit union will likely offer lower interest rates and better repayment terms than traditional banks. You will have to apply to become a member if you haven't already joined. Then you will be able to apply for their secured or unsecured loan options. Thankfully a low credit score alone won’t disqualify you from getting a loan from credit unions and they will base the outcome of your application on several affordability factors. Every credit union is different in terms of size and process so it will depend on the credit union that you join what is involved and whether they are online or in personal applications. Loans from credit unions tend to be the cheapest option, however, they may be for smaller loan amounts and it's it most likely that a hard credit check (which may impact your credit score negatively) will be required.

Online Direct Lenders

Online lenders are arguably the most straight forward way of obtaining a personal loan, especially if you require one in a hurry. The online market is saturated so you must do your research. Each online lender’s website typically allows you to enter your details and find out what amounts are available to you as well as the fee involved. Generally speaking, they will use your credit score, credit history, and your income to determine your options. It is always best to shop around and be wary of lenders who play on your panic and hook you into committing to undesirably high interest or an excessive origination fee. If you choose to do your research on various sites be very careful that you are only allowing soft credit checks to be carried out, if you make loads of inquiries and allow lenders to carry out a hard credit check then you may unwittingly seriously harm your credit score.

Sounds time-consuming, doesn't it?

Luckily for you, this where Loanza comes in! We proudly work with the best online lenders in the USA, whatever the loan amount or loan term you need, we are here to help you secure the best loan possible at the lowest rate available and our service completely fees! No fee involved.

How Do I Apply?

When Applying for a Pay Day Loan With Loanza Online We Will Need To Know. . . 

Your name, email address, the amount you want to borrow, and how long for!*

Based on your requirements and information, we will generate the best possible option for you at the lowest fee from our wide selection of lenders. Once we have matched you to a loan you will be redirected to their website where you can seal the deal. Easy!

What information Do I Need to Supply When Applying For A Direct Lender Payday Loan?

Direct Lenders will set their own application requirements which you can view online before starting your application. This means that the information required may differ slightly from lender to lender. However, you can expect to be asked for the following personal information as standard:

  • Personal Details - Name, date of birth, home address, email address, phone number, a copy of valid ID.
  • Income Details - Employment status, income amount, how often you are paid, employer's contact details.
  • Bank Account Details -You will be asked to provide the details of any banks you have open along with details of any savings. They may ask you about your credit score, too.

Please make sure you read over the terms and conditions and check whether or not they carry out a hard or soft credit check.

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Let's Talk About Fees

As we have already touched on if you can save up for an expense then its best to do so. Saving up is essentially the same as monthly payments and means that you can avoid any additional fee. However, we know there are circumstances in which you will have to purchase first and payback later and are happy to or need to accept that an additional cost will be applicable. Every lender sets their own fees but there are two main additional costs you can expect...

Interest

Every loan has an interest rate attached. The interest rate is defined as a percentage of an amount loaned which a lender charges as interest to the borrower. It is the rate that the lender charges to borrow its money and is how the business makes its money. The lower the interest rates the better for you which is why it's best to shop around and consider all of your options. This is agreed as part of the loan terms and the fee is paid back as an added percentage to your monthly payments. Several factors can impact your interest rate including; the lender you use, your credit score, whether you secure the loan, and even the loan term (length of loan) etc.

Origination Fee

Some lenders will charge an origination fee upfront when you take out a loan. The origination fee is an upfront cost paid by you to the lender as part of the application process. Just like interest, an origination fee is quoted as a percentage of your loan amount but instead of being paid back monthly its an upfront cost usually between 0.5% and 1% of the amount you borrow. In many cases, you can avoid and origination fee altogether and in some cases paying and origination fee can grant you access to lower interest, saving you money overall.

Bottom line

Taking out credit should always be taken seriously and only done when absolutely required. However, it's also a valuable lifeline than can save us heaps of trouble and sometimes even money long term. A small personal loan can help us out in countless circumstances and at Loanza, we pride ourselves in helping you find the best match with the best loan terms available.

*Further details may be requested later in the application process.