Small Unsecured Personal Loans for Bad Credit

Discover small unsecured personal loans even with bad credit through zaving's accessible options.

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

Are you in need of small unsecured personal 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 unsecured personal loans and how do they work?

Small unsecured personal loans, usually ranging from a few hundred to a few thousand dollars, cater to immediate financial needs without requiring collateral. As unsecured loans, borrowers are not required to put up collateral – in other words, does not have to pledge any asset as security for the loan. These loans are available through banks, credit unions, online lenders, and various financial institutions.

When applying for a small personal loan, you'll need to provide details about your financial standing and creditworthiness. Lenders consider factors like your credit history, income, and job status to assess your eligibility. If approved, the loan amount is often deposited directly into your bank account.

Repayment terms for small personal loans differ but commonly involve fixed monthly payments over a set period, typically spanning a few months to a couple of years. Interest rates may be fixed or variable, depending on the lender and your credit profile.

These loans serve diverse purposes, whether it's addressing unexpected expenses like medical bills or car repairs, consolidating debt, or covering smaller purchases. Responsible management, including timely repayments, is essential to prevent additional fees and interest charges.

How are small personal loans different from payday loans?

Small personal loans and payday loans serve as avenues to secure quick funds, yet they differ significantly in their terms, costs, and appropriateness for diverse financial situations.

Small personal loans, unsecured and typically ranging from $2,000 to $5,000, offer more extended repayment periods, spanning from 12 to 60 months, with interest rates typically falling between 6% and 36%. This category of loans is well-suited for more substantial expenses like debt consolidation, home repairs, or medical bills. They are particularly favorable for borrowers with good to fair credit, as they enjoy more flexible and accommodating terms.

On the flip side, payday loans, also unsecured, cater to smaller amounts, usually falling between $50 and $1,000, and necessitate repayment within a brief period, often 2 to 4 weeks. However, their interest rates skyrocket significantly, ranging from 391% to 782%. These loans are designed to address short-term emergencies and cater to borrowers with limited credit options. However, they should be approached cautiously, serving as a last resort due to their high costs and the potential to ensnare borrowers in a cycle of debt.

The primary distinctions between small personal loans and payday loans revolve around the loan amount, repayment term, interest rate, and credit requirements, offering consumers varied options based on their financial needs and creditworthiness.

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

Getting an unsecured small personal loan with bad credit is possible, but it may demand additional considerations and scrutiny. While your credit score plays a significant role in determining the interest rate you qualify for, there are lenders specializing in providing loans to borrowers with less-than-perfect credit histories. These lenders may conduct a comprehensive assessment of your financial situation, taking into account factors such as income stability, employment status, and overall financial health to determine your eligibility.

Remember that bad credit may limit your options or result in higher interest rates and 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 favorable option. You can compare rates online or visit your local bank or credit union.
  • Be prepared to provide documentation: Lenders will require verification of your income and employment. Gather necessary documents like pay stubs, W-2s, and bank statements.
  • Consider a cosigner: If you have a friend or family member with good credit, they may be willing to cosign your loan, potentially leading to a lower interest rate.
  • Create a repayment plan: Before taking out a loan, establish a clear plan 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?

Raising your credit score involves crucial steps: check reports for errors, ensure timely bill payments, and manage credit card balances under 30% of the limit. Maintain a consistent credit history, diversify credit types, and minimize new accounts. Seek advice for continuous progress.

How quickly can I get a small personal loan?

The speed at which you can secure a small personal loan is dictated by various factors, including the lender's processing methods, your creditworthiness, and the complexity of your loan application. Nonetheless, upon successful approval, you can typically expect to receive your loan funds within one to five business days.

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

Small personal loans offer a versatile solution for financing, unlike dedicated loans like mortgages or car loans, which typically have strict usage restrictions. This flexibility allows borrowers to utilize the funds for diverse purposes, such as debt consolidation, medical expenses, home repairs, or addressing unforeseen costs. However, it's always advisable to consult with your lender regarding any potential limitations or specific terms associated with the loan.

How do I choose a small personal loan?

When considering a small personal loan, analyze your financial needs, compare interest rates from multiple lenders, consider the APR, assess loan terms, check your credit, explore cosigning, compare fees, understand the specifics, and seek professional advice if needed.