Small personal loans: here's the smallest amount you can borrow

When you can foresee a financial bump in the road ahead, small personal loans have you covered. If you need a short-term finance solution to keep in control then a small personal loan may be your best option.

Banks, credit unions and online loaners may offer anything from $300 to $20,000 for a whole range of reasons - you want to extend your travel plans, your house plumbing needs an overhaul or your wedding reception could do with catering for a few more tables to keep everyone happy. 

Where do I get one?

There are many places to apply for a small personal loan, though do bear in mind it is best not to make multiple applications as this can negatively impact your credit score.

Do your research on banks, credit unions and online loan companies who will each set their own eligibility requirements and interest rates based on your credit history and income. 

Choose a small personal loan provider with a solid reputation for customer service and good customer service rating and reviews. Make sure they are registered on one of ASIC Connect's Professional Registers. If they're not listed on one of these three lists, they're operating illegally. 

Is a small personal loan for me? 

Think of a small personal loan as a micro loan with shorter payback periods. You borrow less and pay it back in a shorter time frame, anything from 3 months to 2 years dependent on the provider. 

They’re more manageable than a pay-day loan that offers immediate money at a high interest rate on the proviso the loan is repaid with your next wage payment. Think of a pay-day loan as an advance on your wages, with interest.

Credit cards only offer a limit you can spend up to, whereas small personal loans give you a lump sum up front at a lower interest rate than a credit card. 

Remember, if you choose a fixed interest rate for any loan then you know what your payments are up front, if you choose a variable then you’ll need to stay on top of your budget as rates change.

How can I spend the money?

Take your pick, a small personal loan is a solution to smooth over life’s peaks and troughs. Your in-laws are coming to stay and you’d like to finally renovate the back room. You’ve saved for an awesome holiday but you’ve decided you’d really like to take in another part of the country, and need to extend your budget ahead of the trip. You may have been putting off a medical procedure, yet have decided to take control and go ahead with the work now, and manage the costs over the next little while. 

A small personal loan in Australia is considered an easy solution, you can usually apply online with no paperwork and you’ll know all your fees upfront so deciding how much you can loan is easy.

What is the smallest amount I can borrow?

Some lenders will go as low as $300 but most small personal loans in Australia will start around the $2000 mark and go up to $20,000.

For amounts lower than $2000 it’s worth weighing up your other finance options. 

Will it impact my credit rating?

Credit scores can be delicate things. It’s important to keep your credit rating healthy. A small personal loan may be a short-term solution to a life issue, but in the longer run it’s better to have a larger loan that’s paid back consistently.

How you apply for your personal loan can also impact your credit score. Avoid the temptation to apply with multiple lenders as this can impact your score, better to do your research and apply for the one that works for you. 

Requesting a personal RateEstimate with Plenti won’t impact your score as it is considered a soft credit check in order to offer you a rate specific to you. If you then apply for a loan, we submit a credit enquiry from Equifax and/or Illion and that enquiry may affect your credit score. 

Your credit rating will also benefit should you choose to consolidate all your debts into one personal loan. Either way, ensuring you meet your regular payments, even topping up payments, will help keep your credit score viable when you want to borrow more. 

Research the banks, credit unions and online loan providers that you consider. Why? Because high interest payday loans are considered by credit agencies as more risk. A small personal loan, however is considered less risk.

Why a small personal loan over a personal loan?

A small personal loan is usually easier to obtain than a standard personal loan – however that all depends on your credit score. 

For smaller amounts, loan approval may well be quicker, though interest rates and fees may be higher for a small personal loan depending on your loan provider. 

Fees and charges

Before applying to a lender, always compare provider fees, admin charges and interest rates. A good comparison site will break these down for you. Try our Plenti comparison guide or Canstar also offers comprehensive comparisons. 

The important elements to compare on all personal loans are comparison rates, interest rates, application fee and loan term. Also enquire about exit fees should you wish to pay out your loan early and default and missed payment fees. The comparison rate will show one figure that encompasses the entire cost of the loan you are researching. 

Plenti’s lending market is live, so it’s good to check our live rates as they can vary depending on our lending markets.

Most providers of small personal loans charge an upfront high-rate establishment fee plus monthly administration fees. Your repayment figures will also have a set interest rate, though repayment terms can be as short as 3 months if you just need a band aid for your financial challenges until you get back on your feet.

Am I eligible?

Small personal loans in Australia are available for both citizens and permanent residents over the age of 18. But you’ll also need to prove a regular income in your bank account. 

A good credit rating will be rewarded with lower interest rates and faster approvals, however some, but not all, lenders will still offer loans to those with bad credit and also those on Centrelink benefits. 

The paperwork

The good news is that small personal loans tend to have a fast approval process and can be done online. You’ll need to show bank statements, employment history, credit card statements and outgoings. If you’re self-employed you’ll need the last two years of your business and personal tax returns (so have your accountant on speed dial). 

Identification documents are a given so get your passport, licence and proof of address together.

Plenti is required to verify the identity of all applicants by law, including under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Most applicants can complete their identity verification online.

Most lenders offer approval within 48 hours, some within 24 hours.

Paying off your small personal loan

It’s important to ensure you make your small personal loan repayments on time. This will keep your credit score shiny. If you can make extra payments or even pay out the loan early, with no fees, then do so. 

However if life serves you some curveballs and you find repayments difficult then contact your provider and have a discussion, you may be able to pause or amend your payment schedule without impacting your credit score.