A personal loan can help you cover unexpected or upcoming expenses. Ideally, an emergency fund should be your first line of defense to cover unexpected bills, but 35% of Americans don’t have enough money available to cover a $400 emergency, according to a 2021 Federal Reserve report on the economic well-being of U.S. households.
You can find personal loans for nearly any amount, including small $1,000 personal loans. Finding the right personal loan will depend on your needs, current situation, and your credit profile.
Where to get a $1,000 loan
Finding lenders offering smaller personal loans can be challenging since banks and lenders generally make more money on large loans. In recent years, though, more financial institutions, including online lenders, banks, and credit unions, have begun to see the value in offering small loans to customers.
It pays to compare lenders, checking rates and fees, before choosing a personal loan. Here are three places to look for a $1,000 loan.
Online Lenders: You don’t have to leave home to find a smaller personal loan. Online lenders offer smaller loans to cover unexpected expenses like car or home repairs or medical bills. Loan amounts often start around $1,000, although some lenders carry smaller or larger minimum loan amounts. Many online lenders allow you to prequalify for a personal loan or check rates through a soft credit inquiry, which won’t affect your credit score. When you officially apply for a loan, the lender will perform a hard credit inquiry, which is a deeper dive into your credit history and financial status. A hard credit inquiry can cause your credit score to drop temporarily.
Banks: Banks offer small personal loans as low as $1,000 or less. Start with your own bank since you already have a relationship. Your bank may be willing to approve you for a personal loan even if you have less-than-stellar credit.Check other local and online banks that offer smaller personal loans that could meet your needs. You may need good or excellent credit to qualify for a personal loan through most banks.
- Credit Unions: Many credit unions offer small personal loans. However, to qualify, you must be a member, which typically requires a shared interest or employer or belonging to a specific community. As a member, though, you may have access to lower rates.Credit unions operate as nonprofits and can pass on savings to their members by offering more competitive rates and fewer fees. Also, your credit union may be willing to overlook poor credit since you already have an established relationship.
What to consider when comparing loans
If you’re considering taking out a personal loan, it’s important to do your homework and shop for the best rates. Interest rates are only one piece of the puzzle, though.
When choosing a lender, there are several other important details to keep in mind. Here are some factors to consider as you search for a $1,000 personal loan.
Interest rates: Your interest rate affects how much you’ll pay for your loan on top of the principal balance. Typically, you need good-to-excellent credit to qualify for a lender’s lowest rates. Some lenders offer fixed and variable rates on loans. A fixed-rate means the rate stays the same over the life of the loan, while a variable rate can fluctuate up and down throughout loan repayment.
Repayment terms: Personal loan terms can range from 1 to 7 years, depending on the lender. For smaller personal loans, expect loan terms to be shorter, possibly even less than one year in some cases. Choosing a shorter loan term can help you score lower rates, but that translates to higher monthly payments.
Fees and total cost: Some lenders charge fees on personal loans. An origination fee is deducted from your loan before it’s disbursed to cover costs related to the loan application process. Lenders may charge a late fee if you miss a payment. Some lenders charge a prepayment penalty if you pay off your loan balance early.
Thanks to the Truth in Lending Act (TILA), lenders must disclose any fees or charges upfront before someone takes out a loan. The TILA disclosure allows you to calculate your loan’s total cost before accepting an offer.
Cost to repay a $1,000 personal loan
The total cost of your $1,000 personal loan depends on the interest rate you receive and the repayment term you select.
Here’s an example of what a $1,000 loan would cost with good credit and a 6% interest rate:
Term (in years)Monthly paymentInterest chargedTotal loan cost| 1 | $86 | $33 | $1,032 |
| 2 | $44 | $64 | $1,063 |
| 3 | $30 | $95 | $1,095 |
| 4 | $19 | $160 | $1,159 |
Choosing a shorter term can increase your monthly payment, but you’ll pay less interest. Choosing a longer loan term lowers your monthly payments but means paying more interest over the life of the loan.