You can use a $2,000 personal loan to cover almost any small expense, such as a medical bill, car repair or home improvement project. But you may have some difficulty finding a loan for this amount — some lenders have minimum loan amounts that are higher than $2,000.
Here’s what you need to know before taking out a $2,000 personal loan, where to find one and how to apply.
- How to get a $2,000 personal loan
- How do small personal loans work?
- How soon can you get a $2,000 personal loan?
- Pros and cons of a $2,000 loan
- How to apply for a $2,000 loan
- Can you get a $2,000 personal loan with bad credit?
- How much will a $2,000 personal loan cost?
- Personal loan FAQs
- Alternatives to small personal loans
You can get a $2,000 personal loan from several online lenders. Some banks and credit unions also offer them.
Online lenders offer convenience — you can apply for a loan and complete the funding process entirely online. And since these lenders don’t have the overhead costs of a traditional bank, interest rates tend to be lower.
Online lending is also one of the quickest funding options. The average funding time for online lenders is one to five business days, and some even offer same-day funding.
You can compare your prequalified personal loan rates from Credible’s partner lenders without affecting your credit.
Banks and credit unions
Some banks and credit unions also offer $2,000 personal loans. With these lenders, you may be able to secure a rate discount for being an existing customer. And since credit unions are not-for-profit, member-owned organizations, you may receive a lower rate on a loan than you would with a traditional bank or online lender.
Stay away from predatory lenders
Predatory lenders, like payday lenders, offer small, short-term loans to consumers — often without a credit check. If you’re approved for a payday loan, a lender will deposit a lump sum of money into your bank account or cut you a check. You’ll have to repay what you borrowed when you get your next paycheck.
Although payday loans can be one of the easiest loans to get, they should only be used as a last resort. Many payday lenders charge sky-high rates and fees that can equate to an annual percentage rate (APR) as high as 400%.
When you take out a small personal loan, a lender issues you a lump sum of money. You repay the loan by making fixed installment payments, plus interest, over a certain period (your loan repayment term).
Two types of small personal loans exist: unsecured and secured. An unsecured personal loan doesn't require any collateral — like a car title or bank account — to qualify for the loan. But a secured personal loan requires you to pledge collateral, which the lender can take if you fail to repay the loan as agreed.
Borrowers likely to get a small personal loan may be looking to…
- Cover home improvements
- Consolidate debt
- Pay for vacations, moving, or weddings
- Seeking emergency funds.
Borrowing a small amount (like $2,000) through a personal loan — and making on-time payments — can help boost your credit score.
How soon you can get a $2,000 personal loan varies based on the lender you choose. The average funding time is usually one to seven business days, but some lenders offer same-day funding or funding as soon as the next business day.
Here's an example of how the same-day funding process works:
- Submit your loan application.
- Receive approval the same business day (if you meet lender requirements).
- Review and sign your loan agreement.
- Provide bank account details.
- Receive your funds.
Credible makes it easy to compare personal loan rates to find a $2,000 loan that works best for your situation.
Before you take out a $2,000 personal loan, weigh the pros and cons.
- Quick access to funds: If you need to access cash fast to cover a small expense, some lenders can deposit funds into your bank account as soon as the same business day. Research or comparison shop different lenders who can fund your loan within days of approval.
- Lower average interest rate than other financial products: A small personal loan typically has a lower average rate than a credit card. And compared to payday loans, it's a significantly cheaper lending option.
- No collateral required: Since most personal loans are unsecured, you won’t have to risk any collateral, such as your home or car title.
You might benefit from a $2,000 personal loan if it’s funded soon after your car needs a sudden repair, for example.
- Fees — Some lenders charge origination fees for processing the loan, which are typically subtracted from your loan amount. Other common fees include late payment fees and prepayment penalty fees for paying off the loan early. These can greatly increase your borrowing costs.
- Potentially high interest rate — If you have bad credit, you may be charged a high interest rate.
- May damage your credit — If you don’t make your payments on time or stop paying altogether, your credit can take a hit.
If you believe taking out a $2,000 personal loan is the right move for you, follow these steps to apply for a $2,000 loan:
- Review your credit. Lenders typically review your credit history to determine whether you qualify for a loan and what interest rate to offer you. Before you apply, check your credit report to see if it contains any inaccurate information, which can bring your score down. You can check your reports from the main credit bureaus — Equifax, Experian and TransUnion — for free each year by visiting AnnualCreditReport.com. If you find any errors, dispute them with the credit bureau.
- Research and compare lenders. Prequalify with as many personal loan lenders as possible to compare rates and terms, without affecting your credit score.
- Submit a loan application. Once you’ve chosen a lender, submit a loan application online or in person. You’ll likely need to provide personal and financial information, such as your Social Security number, date of birth and income. A lender may also ask to see your driver’s license or other identifying documents.
- Receive funds and repay what you borrowed. If your loan is approved, your funds should be deposited to your bank account within a few business days. Repay what you borrowed as agreed to avoid late payment fees and damage to your credit.
If you aim to borrow a larger personal loan, keep in mind that eligibility criteria could become stricter. After all, lenders would need to evaluate whether you could afford higher monthly payments.
Yes, it’s possible to get a $2,000 personal loan with bad credit — a smaller loan is generally easier to get approved for with a lower credit score. Some lenders have minimum credit score requirements as low as 550. But keep in mind that you’ll likely be charged a higher interest rate if you’re approved.
For example, if you have a credit score of below 670, your interest rate would likely be higher than 10.16%, the average two-year personal loan rate, according to January 2023 data from the Federal Reserve.
If you have bad credit and want to increase your approval odds or chances of securing a lower APR, consider searching for a lender that allows you to apply for a personal loan with a cosigner who has good or excellent credit. A cosigner is someone who agrees to repay your loan if you aren’t able to make payments.
The amount you’ll pay for a $2,000 personal loan depends on your interest rate and loan term. The higher your interest rate, the greater your borrowing costs will be. And the longer your loan term, the more you’ll pay in interest. You’ll also have to factor in any fees the lender charges, such as origination fees and prepayment penalties.
What’s the monthly payment on a $2,000 personal loan?
Let’s look at how much your payment could be based on your credit score and a three-year repayment term.
Borrowers with good credit could receive an interest rate of 12.02%. A $2,000 personal loan with that rate and term would have a $66 monthly payment, and you’d end up paying $392 in total interest.
By contrast, borrowers with low credit scores may qualify for a rate of 26.62%. The monthly payment at that rate would be higher, at $81, and you’d pay $925 in interest over the life of the loan — a difference of $533.
Credible lets you easily compare personal loan rates from multiple lenders, all in one place.
Read on for the answers to some common questions about personal loans.
What can you use a personal loan for?
You can use a personal loan to cover almost any expense, such as emergencies, home improvement projects, debt consolidation and more. But some personal loans come with restrictions.
For example, some lenders may prohibit you from using a personal loan to pay for college education expenses, business expenses or securities. Contact the lender before applying to ensure you can use the funds for what you need.
What are the requirements for a personal loan?
Although eligibility requirements vary, lenders usually consider these three factors when you submit your loan application:
- Credit score — In general, the higher your credit score, the greater your chances are of receiving loan approval and a lower interest rate. A score of 670 can improve your chances of approval.
- Debt-to-income (DTI) ratio — Some lenders have maximum DTI ratio requirements. Your DTI measures your average monthly debt against your gross monthly income and is expressed as a percentage. For example, if your monthly debt is $2,000 and your gross monthly income is $4,000, your DTI ratio is 50%. Lenders don’t want this number to be too high, as it could indicate you’re struggling financially, so you should aim for a DTI ratio no higher than 36%.
- Income — It’s also common for lenders to have minimum income requirements to ensure you have enough in your budget to repay your loan.
How do personal loans compare to credit cards?
If you’re approved for a personal loan, a lender will issue you a lump sum of money. By contrast, if you’re approved for a credit card, a credit card company will issue you a line of credit you can borrow from as needed, up to your credit limit.
Personal loans typically have lower average interest rates than credit cards. For example, the average 24-month personal loan interest rate was 9.09% in November 2021, according to the Federal Reserve. During that same time period, the average credit card interest rate was 16.44%.
If you don’t think a personal loan is right for you, consider these alternative options:
- Get a 0% interest credit card. If you have good or excellent credit, you may qualify for a credit card that allows you to make interest-free purchases for up to 18 months or longer. As long as you pay off the balance in full before the promotional period ends, you can avoid paying interest. Just know that you’ll be charged interest on any remaining balance after that time.
- Borrow money from family or friends. A family member or friend may be willing to offer you a loan with a minimal interest rate, or no interest. If you find someone who will loan you money, discuss the terms of the loan, such as the interest rate and repayment schedule. Repay the loan as promised to avoid causing a rift in your relationship.
- Take on a side hustle. If you only need to make a small amount of money, you may be able to start a part-time job on the side to save up. Consider driving for a rideshare app or working part-time on the weekends to reach your goal.