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You don’t have to scramble to borrow from friends or family when you have an emergency expense. A small personal loan from a lender can be a convenient way to pay a major car repair bill or make an important purchase.

When taking out a small personal loan, it doesn’t require collateral like a home or car loan would, but the rate of interest still depends on your credit score. While you might still qualify for a loan when you don’t have great credit, you’ll end up spending more on interest every month.

A small personal loan is normally below $3,000 and has a maximum rate of 36 percent. It’s usually paid back in monthly fixed payments with a loan term of more than a few months. If that sounds like the kind of loan you need, there are a few institutions that you can visit to apply for a small personal loan.

Credit Unions

One of the best places to get a loan is a local credit union. Credit unions are institutions that don’t make a profit. They use a money cooperative to lend money to its members, which can influence the rates that the person will pay to borrow money. They often don’t require a minimum credit score and don’t have strict income requirements. The credit union will glance at the potential borrower’s income and apply a ratio based on the amount they owe to others. Credit unions allow borrowers to take out small loans, which are as little as $500.

You don’t have to be a member of the credit union to take advantage of applying for a loan at the institution. There are locally owned credit unions as well as those owned by the government. A federal credit union is insured by the government, and they often charge up to 18 percent APR while state and local credit unions have higher rates.

Online Lenders

Once you cross over into the online realm for a personal loan, you have to be careful about
where you find a loan. Online personal loans are simple and easy. They’ll often cater to those with bad credit scores, but the rates can reflect that with 36 percent rates.

Online lenders will take into account your job as well as your credit history, credit score and income when deciding whether to give you a loan. Make sure you’re checking all the fees associated with the loan like origination fees as well as payment allowances. Some lenders will charge fees for early repayment.


There aren’t many banks that allow small personal loans. Citibank and Wells Fargo are some of the few that offer personal loans for applicants. In some cases, the bank will require you to be a member, which means opening a bank account with that lender. The loans start at approximately $2,000 and the borrower will pay interest based on their credit.

If you’re a member of these banks, you can get a good rate if you’ve remained an excellent customer with good credit. Bank interest rates are on the higher end of the spectrum compared to credit unions.

Payday Lenders

When a lender doesn’t check your credit, you can easily get a small personal loan even if you have terrible credit. You’re paying for that with huge APR interest rates that could balloon into the hundreds each month before the premium is even paid.

Payday lenders as well as car title loans can become increasingly difficult to pay off for the person who borrowed the money, which will have a bigger impact on their credit. In some cases, the APR could exceed 1,000 percent. It becomes impossible to pay back the money.

While it helps if you plan ahead for emergencies with a fund that you pay into over time, there are situations that require an emergency personal loan. When possible, try to work with a lender that won’t charge you high amounts of interest each month or fees that make it impossible to pay back the money.

It helps if you plan head by fixing your credit too. A good credit score means that you’ll end up with an interest rate that doesn’t feel like you’re being robbed each month as you pay it back to the lender.