7 Types of $500 Loans and How to Get One

If you need cash now, you may be able to get $500 or more via a payday alternative loan (PAL), cash advance app, credit card cash advance, or even some personal loans. But certain options are better than others, and what's available to you depends heavily on your credit score and history.

Types of $500 loans

The Federal Reserve estimates that 37% of Americans can't cover a $400 emergency expense with cash or its equivalent. If you're among them, here are some different types of $500 loans you could try.

1. Personal loan

A personal loan is a lump-sum loan that's repaid through monthly installments over a set term, often between one and seven years. While many lenders offer loan amounts starting at $1,000 or higher, you might be able to find a few lenders that will lend you $500. For example:

• Navy Federal Credit Union offers personal loans as low as $250, with APRs from 8.99% to 18.00%, depending on your credit and the length of the loan term. Available terms last up to 60 months. However, you have to be a member of the credit union.
• OppLoans offers $500 loans, but APRs range from 160% to 195%. These APRs are high relative to other personal loans, but they're much lower than payday loan APRs, which can reach 400% or more. OppLoans reports payments to the credit bureaus and offers terms up to 18 months. Consider this option only if you can't qualify for a traditional personal loan.

Compared to most other small loan options, personal loans have longer repayment periods, smaller monthly payments, and lower APRs. However, they can be more difficult to get if you have bad credit.

Many lenders offer a quick online process to see if you can prequalify within minutes (and without hurting your credit score). Just remember that prequalification is not an offer of credit, and when you submit a formal application the lender will conduct a hard credit check, which can temporarily ding your score by a few points.

Learn More: Prequalifying for a Personal Loan: What To Know

2. Cash advance via an app

In recent years, cash advance apps have cropped up that let you borrow against your next paycheck without a credit check and without interest, but not necessarily without fees.

Most offer interest-free cash advances of up to $500 or $750 with your next payday as the repayment deadline. Upon approval, the cash is sent to your bank account, typically within three business days for free. If you need money the same day, most apps charge an express transfer fee or expedited funds fee - this is where cash apps can get expensive.

For example, Dave charges 1.5% of the transferred amount to send cash to your debit card within an hour. So, it would cost $7.50 to transfer $500 to your debit card with Dave, which equates to an APR of 39%. If you add a $5 tip, the APR increases to 65%.

While cash advance apps can be quick and convenient, potential drawbacks include:

• Costs that add up: Membership fees, tips, express fees, and other charges can add to the cost of a cash advance, even with no interest charges. The Center for Responsible Lending found that the average cost of a cash advance paid in seven to 14 days was the equivalent of paying 367% APR, rivaling that of some payday loans.
• Low loan amounts: The majority of advances from cash advance apps are in the $100-$200 range, according to the Center for Responsible Lending. Dave notes on its website that the average ExtraCash advance is $170.
• Multiple advances: Because the advances are typically small amounts, users may find themselves taking out multiple advances — and paying the resulting fees for each one.

In short, it's a good idea to avoid cash advance apps — or to at least avoid paying tips and fees for same-day funds.

3. Cash advance via credit card

Most credit cards allow you to withdraw up to a certain percentage of your credit line in cash through an ATM or bank. The upfront fees are commonly around 3% to 5% of the advance amount. So, a $500 cash advance could cost you $15 to $25 plus interest.

Importantly, cash advances often come with APRs of 30% that apply immediately and until you pay the amount off in full. For example, if your APR is 30% and your advance is $500 plus a $25 fee, the advance would cost about $13 in interest per billing cycle.

Credit card cash advances can be convenient if you already have a credit card, but the combination of the fee and interest charges could make them relatively expensive.

Compare: Payday Loan vs. Cash Advance

4. Payday alternative loans

Payday alternative loans (PALs) are small, affordable loans offered by certain federal credit unions. They were designed by the National Credit Union Administration (NCUA) to create an affordable alternative to payday loans. 

The issuing credit union can only charge fees to cover the actual costs of processing the loan applications (and only up to $20). APRs are capped at 28%. Two types of PALs are available:

5. Payday loans

A payday loan refers to a small, short-term loan that you repay from your next paycheck — often within two to four weeks. They generally don't require a credit check, but they typically have high costs. Fees can equate to 400% APR or higher, depending on your state. Many states regulate their maximum loan amounts, terms, and finance charges. A handful of states have even banned them.

If you're considering a payday loan, use a payday loan calculator to see what the APR is on the loan. Then, compare that to other options like a cash advance app (ideally, without a fast-funding fee or tips) and a credit card cash advance (if available). If you're eligible for membership with a credit union offering PALs, go that route instead.

6. BNPL apps

Buy Now, Pay Later (BNPL) apps can provide short-term, interest-free financing for online and in-store purchases. BNPL apps are a type of installment loan and funding is instant once you're approved. Unlike the previous loan types, you don't receive the cash directly.

When you make a purchase with a BNPL app, you may or may not need to make a down payment. Several apps allow you to choose a payment plan. "Pay in 4" plans are common, splitting your payment into four equal installments. But you may also be able to spread your payments over several months or years.

Most BNPL apps don't require a hard credit pull for short-term funding, but may for longer-term options.

7. Small bank loans

Some banks, such as Bank of America and U.S. Bank, offer small loans (up to $1,000, in the case of U.S. Bank). But you generally need to have an account in order to qualify. 

For example, Bank of America offers a balance assist program of $500, which is repaid over three months for a $5 flat fee. Check with your bank or credit union to see if similar low-cost loan options are available.

Where to get a $500 loan

You can find $500 loans from a variety of providers, including:

• Personal loan lenders: A few lenders offer personal loans of $500, though loan minimums of $1,000 or more are more common. Personify, Oportun, and First Tech are among the lenders offering $500 personal loans.
• Cash advance apps: Popular apps offering cash advances up to $500 or $750 include EarnIn, Dave, and MoneyLion.
• Credit card providers: Most credit cards allow for cash advances. Shop around and compare rates.
• Federal credit unions: Federal credit unions that belong to the NCUA may offer PALs. Find one near you.
• Your bank: Some banks offer small, short-term loans exclusively to existing account holders.

How to qualify for a small personal loan

Common eligibility criteria for obtaining a $500 personal loan include:

• Credit score: You may need to meet minimum credit score requirements. Applicants with FICO scores below the 670-739 range (good credit) may have trouble qualifying, although some lenders cater to borrowers with fair credit and bad credit.
• Credit report: Lenders often check your credit report to review your payment history, outstanding debts, and other records. Derogatory marks or high credit utilization rates can result in denials.
• Income: Lenders may check your income amounts, sources, and payment frequency.
• Employment status: Many lenders require you to be actively employed and will ask about your employment history.
• Valid government ID: You need a valid identification document from the U.S. government.
• Active bank account: You might need to have an open and active bank account where the funds can be deposited. Some lenders give you the option of paying the money from a debt consolidation loan directly to your creditors.

Learn More: What Are the Requirements for a Personal Loan?

How quickly can I get a $500 loan?

Here are the funding times you can expect from various providers:

• Personal loan lenders: Some personal loan lenders can make approval decisions within minutes and deposit the funds as soon as the next business day or, depending on the lender, the same business day. Others can take up to a week.
• Payday loan lenders: Online loans are typically funded the next business day, while in-store loans are funded the same day.
• Cash advance apps: Standard bank transfers can take up to 3 business days or longer, depending on the app, while express transfers can be completed in seconds or minutes.
• Credit card providers: Once approved, it can take 5 to 7 business days to receive a credit card in the mail. Cash advances are available same-day once you have a credit card.
• Federal credit unions: Credit unions will vary, and loans could take up to a week. Check the details with your credit union of choice.
• BNPL loans: BNPL loans instantly fund your purchase if approved.
• Your bank: If your bank offers small, short-term loan options, you could get the money deposited the same day you apply.

Related: How Long Does It Take To Get a Personal Loan?

How much will a $500 loan cost?

The cost of a $500 loan depends on the following factors:

• Interest rates: Some lenders charge an interest rate in addition to or instead of fees, which determines the percentage of the loan amount that you'll pay per year in interest.
• Fees: You may be charged fees instead of interest (based on the loan amount), a flat fee, or fees in addition to interest. Common fees include application fees, loan origination fees, late payment fees, and more.
• Loan term: The term determines how long you have to repay the loan. It affects the amount of interest you have to pay and the loan's APR. Short-term loans that charge fees tend to have high APRs. For loans that charge interest: The longer your repayment period, the more interest you generally pay.

For example, let's say you take out a $500 loan with a 25% APR and a 10-month term. Your monthly payment would be $55.91. By the time you pay off the loan, you'll have repaid the $500 plus about $59 in interest.

On the other hand, if you were to borrow $500 via a payday loan, you could be charged $75 ($15 per $100 borrowed). The $575 would then be due within two to four weeks. A two-week loan would have an APR of 391%. If you can't repay the full amount on time, payday loan lenders often charge additional fees to extend your payment terms.

The personal loan is cheaper than the payday loan and allows for more affordable payments over a longer repayment term.

What to consider before taking out a $500 loan

Making a decision too quickly is a common mistake for a lot of borrowers, according to Tyler West, MPA, AFC, and Financial Guide at Your Money Line.

 "Borrowers may feel that they have to find a solution quickly," says West, which can lead to overlooking major consequences. "When you are considering borrowing, it is important to force yourself to slow down and review all the information involved in the decision-making process."

The following considerations can help you make an informed decision about taking out a loan:

• Determine how soon you need the money: If you need the money as soon as possible, a cash advance or BNPL loan may be your best option. If you can wait several days, a personal loan or PAL is likely a better solution. However, if you don't need the money in the near future, try saving up for the expense rather than borrowing.
• Compare costs of different loans: Interest rates, fees, and repayment terms vary between lenders and loan types. Use an APR calculator to compare your options to make sure you don't spend more on a loan than you need to.
• Consult your budget: Before taking out a loan, take a close look at your budget. Make sure you can afford the monthly installments so you don't fall behind on repayment — otherwise, you risk damaging your credit and potentially facing calls for collection.
• Get clear about your intentions: Know why you need to borrow money, what you'll spend it on, and how much you need. Consider whether the expense is really worth taking on debt. Be honest with yourself and borrow only what you need.
• Weigh all your options: A $500 loan may not be the smartest way to get money. Consider alternative options like payment plans, charitable grants, government assistance, or borrowing from friends or family.

Small loan alternatives

In certain circumstances, an alternative to a small loan might be the best solution for you. Options could include:

• Medical repayment plans or financial assistance: If you need money to cover medical bills, see if you can negotiate a payment plan with your provider or insurance company. This lets you spread payments over time, similar to a loan. You can also see whether you qualify for financial assistance or discounts, which may be available to lower-income or underinsured patients.
• Utility payment plans, charitable grants, and government assistance: Government entities, nonprofit organizations, utility companies, and more may offer payment plans, grants, or other financial assistance to those struggling to pay for necessities. Ask your utilities companies about hardship assistance or visit 211.org to see what's available to you.
• Borrowing from family or friends: If someone in your life has the means and is willing to lend you money, you may be able to benefit from a lower-interest or even interest-free loan. Just make sure you're both clear on repayment terms and expectations.

Check Out: Should You Borrow Money From a Family Member?

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• Does Applying for a Loan Hurt Your Credit Score?
• Should I Get a Personal Loan?
• Was Your Personal Loan Application Denied? What To Do Next
• The Best Ways to Borrow Money
• Best Personal Loans for Bad Credit
• Best Personal Loans for Fair Credit
• Best Personal Loans for Good Credit