Finding Small Personal Loans

Obtaining small personal loans can be more difficult than finding a lender for a large loan or mortgage. Lenders make their money from the interest you pay for the loan and even high interest rates on small balances do not add up to much. With that in mind, you do have several options for getting a small dollar loan, but remember the interest rate will be higher than it is for larger dollar amounts.

Banks and Credit Unions

Your bank is among the best source of small personal loans in the industry, especially if you have a long-standing relationship with them. Leveraging your total financial relationship with the institution can help keep your rate affordable. This is also a convenient option because many banks allow you transfer money online from your checking account with them to the loan account.

The primary disadvantage of getting a small loan from your bank is they usually have minimum loan amounts. If you only require $250 and they require you to borrow $1,000, your payments will be much higher than you want, even if you do immediately repay the unwanted $750 difference.

Payday Loan Companies

Payday loans are another source of small personal loans. You take them your paystub and often walk out with your money within minutes. When you’re in dire need of funds between paydays, this may well be your best option.

Before you head to the payday loan company near you, keep in mind that these loans have the highest annual interest rates in the lending industry. Because the term is often only a few weeks, these companies will not report your payment history to the credit bureaus unless they send you to collections. If you’re looking for small loans to help build up your credit score, this isn’t the right loan option for you.

Credit Card Cash Advances

If you have a credit card for any length of time, you lender will start sending cash advance or convenience checks to you with your statement. These checks allow you to take out small personal loans without using your card, limited only by your credit limit. When you need money to pay another credit account, you can use these checks.

Even when the convenience check offers a lower interest rate than you pay for your credit card charges, they typically charge a cash advance fee for the privilege of using the check. Depending on the advance amount, this can be a substantial charge added to your loan balance. Do the math on any planned advance before you use the checks to ensure the lower interest rate offered is as good a deal as it looks.

Even though small personal loans charge higher interest rates, you can still find the exact loan you need if you can be flexible in your approach.

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