Types of small loans

"Small loan" covers very different products: a short instalment loan from a bank, a credit union loan, an interest-free advance from a charity, a pawn loan or a peer-to-peer loan. This section sorts them so you can find the one that genuinely fits your situation rather than the one advertised most loudly.

Start with three questions: what exactly do you need the money for, how much can you repay each month without strain, and is there a grant or support scheme that avoids borrowing altogether?

Small loans by need

Some expenses have dedicated solutions. Car repairs, rent arrears, utility bills or home improvements may be covered by hardship funds, payment plans or targeted schemes before any loan is needed. Our page on a small loan to pay bills starts with what to ask your supplier first.

Small loans by profile

Students, pensioners, self-employed people, casual workers and benefit claimants each face different checks and have different alternatives. A student-focused guide covers official student finance, hardship funds and bank overdraft options, for example.

Bad credit and financial difficulty

Missed payments on your credit file change which lenders will consider you, and borrowing more can make things worse. Read our page on a loan with bad credit, which puts free debt advice and safer options first.

Formats and channels

Online lenders, apps, text loans, P2P platforms, Islamic finance and community lenders all work differently. A social micro-loan from a not-for-profit lender is often the safest route on a tight budget, while "instant" offers need a careful read of the cost.

Costs to watch

Two loans with the same monthly payment can cost very different amounts once fees, term length and optional insurance are added. The APR brings interest and compulsory charges into one figure, so it is the fairest way to compare offers of the same size and duration. Late-payment charges and rollover fees are not always in the APR, so read that section of the agreement too.

How to choose

• Borrow the exact amount you need over the shortest term you can afford.
• Compare the APR and the total amount repayable, not just the instalment.
• Check whether a credit union, grant or interest-free scheme is available.
• Confirm the lender is authorised by the regulator in your country.
• Walk away from anyone asking for a fee before paying out the loan.

To estimate repayments before you apply, try our small loan calculator guide.