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What is the minimum amount I can borrow on a personal loan?

Alex Ritchie avatar
Alex Ritchie
- 6 min read
What is the minimum amount I can borrow on a personal loan?

When looking into getting a personal loan one of the first questions customers ask is how much money they’re eligible to borrow. But what if you only need to borrow a small amount?

It’s not uncommon for Aussies to face higher-than-expected bills and need a little help paying them off or be short just a few thousand dollars from their savings goal. This is where smaller sum personal loans may offer a helping hand, depending on your financial situation and budget.

In terms of the minimum amount one can borrow, most personal loan lenders generally offer financing from $5,000 to upwards of $50,000. If you’re looking for a smaller loan sum, there may be alternative financing options worth considering.

Let’s explore some common scenarios in which small personal loans or an alternative financing option may suit.

Scenario 1 – You’re short funds for your savings goal

Whether you’re saving up for a car, a holiday, or your wedding, sometimes our scrimping and careful budgeting doesn’t meet our deadlines. For the debt averse, borrowing money can seem like you’ve failed in saving up. This is where it’s important to look at credit as a tool that may be useful for those who manage it responsibly.

If you’re only a few thousand dollars away from your savings goal and you’ve been diligently saving for some time, a small personal loan may be worth considering. After all, if you’ve already done the hard work of saving up most of the money needed for your wedding, for example, then you’re potentially saving thousands in interest by not taking out a personal loan for the full cost. Further, your budget is already set up to make regular savings deposits, so you can just divert these funds towards making loan repayments for the future.

Alternatively, if you’re just looking for some extra cash for a holiday, it may be worth considering a travel credit card. Not only might this offer you access to a line of credit, you may also enjoy benefits like no foreign transaction fees or frequent flyer rewards, depending on the credit card issuer.


Scenario 2 – You’re short on cash to pay bills

Another scenario in which you may be considering taking out a small personal loan is the frustrating situation of having bills you cannot afford to pay, such as your energy and gas bills.

However, if you’re struggling financially due to lost income or mounting debts, it might be better to consider an alternative. Adding to your expenses through taking out a personal loan may only increase your financial stress, especially if that means making interest repayments on a loan for up to five years due to one overdue bill.

Banks and utility providers are experienced in helping customers who are working through rough patches, and 2020 demonstrated just how far they were willing to go to give people breathing room to pay their bills.

If you’re unable to pay your bills in full, consider calling up your provider and requesting hardship support. The provider should work with your finances and offer you a payment plan that you’re able to afford. They may even freeze repayments for a set period, so you can save up the funds needed for the bills.


  • Talk to provider about a payment plan and/or hardship support

Scenario 3 – Unexpected medical costs

They say to expect the unexpected and unfortunately this is true of the occasional medical bill as well. If you chip a tooth or need a root canal, for example, the cost of repair can easily blow out an average person’s budget.

If you don’t have the funds on hand and need a little financial help, unexpected medical costs may be a reason to consider taking out a small personal loan. Health insurance doesn’t always cover your medical needs, and if it does there may be an excess you need to pay out of pocket. A small medical personal loan may help you to pay off these unexpected costs, if the worst were to occur.

Alternatively, some doctors and dentists do offer ‘buy now, pay later’ payments for smaller medical costs. This may be a competitive option to consider if you can afford the part payments, especially as it cuts out interest charges. Plus, if you only need a few hundred dollars, this can save you having to borrow $5,000 or more, depending on a personal loan provider’s minimum loan amount.


Scenario 4 – Your car is damaged, and an insurance payout is delayed

Another situation that may pop up in which you need a smaller loan is if your car were to be damaged. In the event that you need to pay for repairs, oftentimes insurance companies can be slow to pay out the necessary funds. The insurance provider may even contest your claim, leaving you in the lurch – especially if you use your vehicle for work.

This is where a smaller personal loan may come in handy. Not only can these funds help to get your car back in working order, if your insurance claim comes through then you have the funds ready and available to pay off the loan.

Please note that this option will involve repaying interest on top of your repair bill. It may be more financially reasonable to wait it out for your insurance payment to avoid costly interest charges.

Alternatively, you could put the cost of repairs on your credit card if your credit limit allows it. But if you’re unable to pay off your balance by the end of your statement period you will be charged interest. The interest on a credit card is higher on average than that of a personal loan, so if you’re going to be charged interest regardless then it’s worth keeping this in mind.



This article is over two years old, last updated on June 18, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent personal loans articles.

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Product database updated 25 Jun, 2024

This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.