Borrowing options for small loans

It’s common to use loans for major financial undertakings, such as debt consolidation, home renovations, or car purchases. But loans can be useful for covering smaller goals, too — or even emergencies.

Small loans may not be as common as larger ones, but you can find lenders offering loan minimums as small as $1,000 today. Here’s a look at where you can find $1,000 loans and other options for borrowing smaller amounts.

Not every lender offers loans as small as $1,000; many have minimum loan amounts of $2,000 to $5,000.

There are also other ways to access $1,000 when you’re in a bind, including credit cards. Just know that these options can be expensive. Have a plan to repay what you borrow as soon as possible to avoid long-term debt.

If you find yourself repeatedly borrowing amounts as small as $1,000, consider how you can prioritize saving money. Using an emergency fund to cover unexpected expenses or get through a period of unemployment is much more cost-effective than borrowing money, which you have to pay back with fees and interest. Even if you can’t save a substantial amount now, small monthly contributions can add up over time.

While you work on saving for the future, here are a few options to consider if you need to borrow $1,000 today:

Not every personal loan lender offers loans as small as $1,000, but there are some options available.  Here are a few of our top personal loan lenders that offer $1,000 loans:

• LendingClub: Personal loan amounts start at $1,000. You can receive your funds in as little as 24 hours, but origination fees can reach 8%.

• Upstart: Personal loan amounts start at $1,000 (though some states have higher minimums); you can receive your funds as soon as one business day after approval.

• Upgrade: Personal loan amounts start at $1,000 with origination fees up to 9.99%.

Personal loans like these allow you to repay the amount you borrow at a fixed interest rate over a fixed period, with monthly payments. Let’s say you qualify for a $1,000 loan with a 16% interest rate, a 7% origination fee, and a 24-month loan term. You would pay about $1,164 in total over the lifetime of the loan with a monthly payment of $52.

Personal loan terms vary; make sure you look at the interest rate, term length, and other details before you borrow. You’ll need a solid credit score to qualify for the best terms and interest rates. If you don’t have good credit, a loan can become much more costly.

Also look out for the loan fees you’ll have to pay. Origination feesfor example, increase the amount you pay your lender to take on the loan. And depending on how you plan to repay the loan, prepayment penalties could apply.

Finally, search for personal loans with credit unions you qualify for and local banks in your area. You may find more options for $1,000 personal loans with favorable terms and interest rates, depending on your credit history and history with the bank or credit union.

If you’re looking for a small loan amount to make ends meet until your next paycheck, a payday alternative loan (PAL) could be a better option than payday loans at exorbitant costs.

PALs are available from federal credit unions and have specific terms mandated by law. These loans range up to $1,000 to $2,000, depending on the type, with loan terms ranging from one month to six or 12 months. PALs have a maximum 28% interest rate at federal credit unions, and you must be a member of the credit union to qualify.

For a short-term, $1,000 loan, PALs can be much more affordable than payday or pawn shop loans which come with far higher interest rates.

Related: 7 credit unions anyone can join

Many credit cards have credit limits of more than $1,000. If you have an emergency or need to make a purchase and pay it back later, a credit card is a convenient option.

Credit cards have a grace period of at least 21 days between when your monthly statement closes and when your statement balance is due, so you’ll have a few weeks to pay back the $1,000 charge before interest kicks in. This is a solid option if you have a payment due now and you know you’ll have the funds to cover it in a short period of time.

If you can’t pay your $1,000 purchase back before your monthly bill is due, you can pay the minimum — though you’ll begin accruing interest on the remaining balance. Credit card interest is expensive and your balance can increase fast, so make sure you have a plan to pay down what you owe as quickly as possible.

If you have good credit, consider opening a 0% APR credit card. You can use the card to cover your purchase and have the entire intro period (usually 12 to 18 months) to pay it down without interest. You should aim to pay back the amount before the end of that intro period, or any remaining amount will start accruing interest at your card’s regular APR.

When you need cash quickly, it’s possible to get a cash advance on your credit card. Like some other high-cost borrowing options, this is expensive and typically shouldn’t be your first choice.

Cash advances are costly because they carry both fees and interest rates. Cash advance fees are typically a percentage of the amount you borrow, with a minimum dollar amount. For example, the cash advance fee may be the greater of 5% or $10. Cash advance interest rates are often more expensive than your credit card’s already-high regular APR — and for cash advances, there’s no grace period. Interest will start to accrue as soon as you receive the money.

Whether you can use a cash advance to borrow $1,000 will depend on the terms of your credit card. You can withdraw cash advances based on your credit limit, though there may be a cash advance limit to keep in mind. For example, if you have a $5,000 credit limit and a 50% cash advance limit, the most you could get advanced is $2,500. If you have a smaller credit limit, you may have more difficulty accessing $1,000 with a cash advance.