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£500 loan - Apply to borrow £500

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Last updated: 04 July 2022

If you’re in urgent need of £500, don’t panic - help is available. While family and friends might be your first choice, there’s a wide range of lenders who will be able to accommodate your needs if that’s not an option. 

However, as with any type of borrowing, a few considerations need to be made. So, being the helpful and benevolent price comparison site that we are, we’ve put together a simple guide for applying to borrow £500.

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What would I borrow £500 for?

Life sometimes throws up situations where a small loan is needed. It could be to get your car repaired, buy a new fridge, or just get you through to the end of the month. There’s no set list of reasons, but it’s important to make sure it’s for something important.

The interest on a small, short term loan is generally going to be pretty high. While the fact it’s a lesser amount means you shouldn't have to pay back too much, missing it, thus and accruing late fees, could land you in a sticky situation. So, before you take the plunge, think about whether you can afford to pay it back on time.

How quickly can I get a £500 loan in my account?

Borrowing £500 can often be a speedy process. If you opt for something akin to a payday loan, it can be in your account within minutes, as these are typically the easiest types of loan to get. As these companies understand that cash is often needed in an emergency, they pride themselves on being able to turn around applications very quickly.

How much will I payback on a £500 loan?

This will depend on a few different factors, namely how quickly you can pay it back. If you can return it quickly, you will pay a lot less than if you need it for several months.

As a general rule, most £500 loans will come in the form of payday loans, which are designed to be paid back within a matter of weeks. But due to their small size, they can have very high APR rates, often exceeding 100%. 

So, if for example, you borrowed £500 at 120% APR for a month, you would need to pay back £550. If you wanted to pay it back over two months, you would likely pay back significantly more, closer to £650, which is roughly 220% APR.

This is why we would always recommend paying back £500 loans as quickly as possible, if you can afford it.

The more money you borrow, the lower your interest rates will typically be. However, even £1,000 loans and £1,500 loans are relatively small, so will too come with fairly high interest rates. 

Secondly, a lender will look at your credit score. If your overall rating is bad, then you might be forced to pay higher interest rates. This is because you will be deemed a riskier investment. 

Other factors to be aware of when taking out £500 loans are:

Upfront costs

Some lenders may charge you upfront costs for the privilege of being able to borrow money. This is not the standard, however, so you can often find deals without them.

Late fees 

If you fail to make payments, many lenders will charge late fees. While these are to be avoided at all costs, it’s important to understand what they could be before you take out a loan.

Can I get a £500 loan without a credit check?

While the short answer to this is no, the longer answer is sort of. There is no one definition of exactly what type of check needs to be carried out.

The Financial Conduct Authority says that lenders must “assess creditworthiness on the basis of sufficient information”. This term can be interpreted in different ways, with two types of credit checks that can be carried out a soft one, and a hard one: 

Soft credit check

A soft credit check will take a surface-level glance at your situation. They will look at any information you have provided such as your income and then any public records such as legal judgements. Essentially, this kind of examination will only throw up really glaring problems, such as county court judgements and bankruptcies. 

Hard credit check 

A hard credit check, on the other hand, will take a look at your actual credit score. This will include information about your entire financial history and is a far more accurate representation of your ‘creditworthiness’.

It’s important to note that even if you do have a poor credit rating (or other similar fiscal blemishes against your name) that doesn’t mean you can’t get a loan. As £500 in a relatively small amount in loan land, you will be more likely to be successful than if you were applying for a larger figure.

What kind of £500 loans can I get?

While the low borrowing amount will limit your options slightly, there are still different avenues you can take:

  • Payday loans: As we’ve discussed, payday loans are the most common type of loans you will find offering £500. They are generally short-term and high-interest, and are often required to be paid back at once, although you can sometimes stagger this.
  • Peer to peer loans: Peer-to-peer loans allow you to borrow from individuals, rather than organizations. Platforms like Leap Lending allow would-be lenders to set their own rates, term limits and maximum amounts. 
  • Guarantor loans: If you are unable to get a loan, or are facing high-interest rates due to a poor credit rating, guarantor loans can help. They require another party to step in and essentially take ownership of the loan on your behalf. While you still receive the money and make payments, they are legally obliged to step up if you stop repaying.

How do I apply for a £500 loan?

Fortunately, applying for a £500 loan is a relatively painless process. Before you get started, however, you will need to have the following information to hand

  • Your monthly salary
  • Your expenses, e.g rent, childcare, bills
  • What address do you live at now, and is your address history
  • Bank account details
  • Contact information
  • Date of birth

Once you have all this information, you can check to use our handy loan comparison tool to see what’s available to you right now.

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Michael Quinn

Author: Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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