Small Personal Installment Loans for Bad Credit

With zaving, access small personal installment loans for bad credit to address various financial needs.

Last updated by Zaving Editorial Team, on January 19th, 2024

Are you looking for small personal installment loans for bad credit? If you need some urgent cash to get you through a tight spot, you can turn to zaving to help you explore your options. Our online service makes applying for a loan quick, easy, and hassle-free. If your loan is approved, cash can land in your bank account straight away – it's as simple as that! Start the application process right here today with zaving.

What are small personal installment loans and how do they work?

Small personal installment loans are financial products that allow individuals to borrow a specific amount of money, usually between a few hundred to several thousand dollars, and repay it over time through fixed installments. These loans are commonly used for various purposes, such as covering unexpected expenses, consolidating debt, or making significant purchases.

The process for obtaining a small personal installment loan typically involves:

  • Application: You start by applying for the loan, often online or at a financial institution. The application requires personal information, financial details, and often a credit check to assess your creditworthiness.
  • Approval: After submitting your application, the lender reviews your information, including your credit score, income, and other relevant factors, to determine whether to approve the loan and the terms offered.
  • Funding: Upon approval, if you agree to the terms provided, the funds are disbursed to you. This can happen through a direct deposit into your bank account or a check.
  • Repayment: Repayment terms are set in the loan agreement. You'll repay the borrowed amount in fixed installments over an agreed-upon period. These installments include both the principal amount borrowed and the accrued interest.
 

Interest rates and repayment periods can vary based on the lender, your credit history, and the loan amount. It's crucial to understand the terms and conditions of the loan agreement before accepting to ensure you're comfortable with the repayment schedule and associated costs.

How are small personal loans different from payday loans?

Small personal loans and payday loans may both provide quick access to cash, but they differ considerably in their terms, costs, and suitability for various financial situations. Small personal loans are unsecured loans, meaning they don't require collateral like a car or house. They typically range from $2,000 to $5,000 and are repaid over 12 to 60 months. Interest rates are usually lower, ranging from 6% to 36%.

Small personal loans are better suited for larger expenses such as debt consolidation, home repairs, or medical expenses. They are also suitable for borrowers with good to fair credit, as they offer more favorable terms. Payday loans are also unsecured loans, typically ranging from $50 to $1,000 and repaid within 2 to 4 weeks. However, interest rates are extremely high, ranging from 391% to 782%.

Payday loans are designed for short-term emergencies and borrowers with limited credit options. They are high cost and have the potential to trap borrowers in a debt cycle.

Key differences include:

  • Loan amount: Small personal loans offer larger loan amounts, while payday loans are restricted to smaller amounts.
  • Repayment term: Small personal loans offer longer repayment terms, allowing for manageable monthly payments. Payday loans have very short repayment terms, creating high-pressure repayment demands.
  • Interest rate: Small personal loans have significantly lower interest rates than payday loans, reducing the overall borrowing cost.
  • Credit requirements: Small personal loans typically require good to fair credit, while payday loans may accept borrowers with bad credit or no credit history.

Can I get a small personal installment loan with bad credit?

Securing a small personal installment loan with bad credit is achievable, but it may necessitate additional factors to be considered. Lenders will evaluate your credit score to determine the interest rate you qualify for. However, lenders specializing in loans for borrowers with bad credit may also examine other factors like income stability, employment status, and overall financial health to assess your eligibility.

Keep in mind that having bad credit can restrict your options and potentially lead to higher interest rates or stricter terms. 

Here are some tips for obtaining a small personal loan with bad credit:

  • Compare interest rates: Obtain quotes from multiple lenders to find the most competitive interest rate. You can compare rates online or visit your local bank or credit union.
  • Prepare documentation: Lenders will require proof of your income and employment. Gather necessary documents like pay stubs, W-2s, and bank statements.
  • Consider a cosigner: A friend or family member with good credit may be willing to cosign your loan, potentially securing a lower interest rate.
  • Develop a repayment plan: Before taking out a loan, establish a clear strategy for repaying it. This will help you avoid missed payments and maintain a positive credit history.

More of your frequently asked questions about payday loans

How can I improve my credit score?

Elevating your credit score requires essential actions: verify reports for errors, prioritize timely bill settlements, and maintain credit card balances under 30% of the limit. Uphold a steady credit history, diversify credit types, and restrain new accounts. Seek guidance for ongoing progress.

How quickly can I get a small personal loan?

The time it takes to acquire a small personal loan depends on a variety of factors, including the lender's processing procedures, your creditworthiness, and the complexity of your loan application. However, as a general rule, you can expect to receive your loan funds within one to five business days if your application is approved.

Are there restrictions on what I can use my small personal loan for?

Small personal loans provide a flexible approach to funding, unlike designated loans like mortgages or car loans, which often impose rigid usage limitations. This flexibility empowers borrowers to allocate the funds towards various purposes, such as debt consolidation, medical expenses, home repairs, or managing unexpected costs. However, it's essential to discuss any potential restrictions or specific terms with your lender beforehand.

How do I choose a small personal loan?

To choose a small personal loan, evaluate your financial needs, compare interest rates from diverse lenders, focus on the APR, assess loan terms, check your credit status, explore cosigning options, compare fees, carefully read the fine print, and seek expert advice if necessary.