Can You Get a $500 Personal Loan?

It’s possible to get a personal loan for $500 or even less, but it can be difficult. Most banks, credit unions, or online lenders don’t offer loans this small because the cost of administering the loan would be greater than the profit they would make. For this reason, most banks and credit unions don’t offer personal loans for less than $1,000.

However, you can get a loan for $500 in a number of ways. These options include payday loans and loans through loan apps. Some of these loans have other benefits. You can receive them fairly quickly, and they may not require a credit check. However, they may also have much higher interest rates than the personal loans offered through traditional lenders.

How to Get a $500 Personal Loan

If you’re looking for a personal loan, the best option may be to apply with a financial institution like a bank or a credit union. A reputable financial institution often offers low interest rates, low fees, and flexible repayment options. You can typically apply online or in person if the bank has branch locations.

However, the smallest loan you can apply for at many lenders will likely be about $1,000 or more, and you’ll need a minimum credit score to qualify. Minimum credit scores will vary by lender.

After you apply for a personal loan, a lender assesses your credit risk to determine if you qualify for the loan. They will consider your credit score, income, and other financial factors. If you’re approved, you receive the money in a lump sum and repay it over time plus interest in monthly payments.

Credit Unions, Banks, and Online Lenders

While most banks, credit unions, and online lenders don’t offer personal loans for less than $1,000, some do. Among them: First Tech Federal Credit Union, which offers personal loans from $500, and Navy Federal Credit Union, which offers personal loans from $250.

First Tech Federal Credit Union and Navy Federal Credit Union offer interest rates from about 8% to 18%, depending on your credit score. So their loans are likely to be much less expensive than payday loans, cash advances, or loan app loans.

Alternatives to a $500 Personal Loan

If a $500 personal loan doesn’t make sense for you, or if you can’t qualify, you can consider other small loan options, such as a cash advance, funding through a loan app, or a payday loan. However, these loans have downsides to consider, like higher interest rates.

Cash Advances

A cash advance is a short-term loan from a bank or an alternative lender. The term also refers to a service provided by many credit card issuers allowing cardholders to withdraw a certain amount of cash against their available credit. 

Cash advances generally have high interest rates and fees, but they may be attractive to borrowers because they have fast approval and funding. If you can pay back a cash advance loan quickly, it may be a useful financial tool.

Loan Apps

Many loan apps now offer small loans, some for as little as $5. These apps also allow you access to your loan quickly (typically within one to three days), and many don’t require a credit check.

Here are some examples of loan apps offering small personal loans:

Using apps like these can provide emergency funds. However, they generally charge monthly fees in lieu of interest that can make borrowing small sums relatively expensive. For this reason, using funds from loan apps is not a sustainable, long-term solution to financial difficulties.

Payday Loans

A payday loan is a type of short-term borrowing where a lender will extend high-interest credit based on your income. Its principal is typically a portion of your next paycheck.

Payday loans charge high interest rates for short-term, immediate credit. They are also called cash advance loans or check advance loans.

Payday loans can also be useful in an emergency, such as to pay for vehicle repairs or medical bills. But they also have high interest rates and may have high penalties if you fail to pay them back on time.

Payday loans aren’t regarded as a good solution to financial difficulties, and they aren’t legal in all states.

What to Consider When Getting a $500 Personal Loan

If you’re applying for a personal loan of any amount, you should consider a number of factors:

• Interest rates: Your interest rate will affect the total cost of the loan. The lower your interest rate, the lower your total loan cost. Compare several loan offers to ensure you get the best deal.
• Fees and charges: Some lenders add significant fees to their loans. If you’re applying for a $500 loan, these charges might be a significant portion of the money you’ll have to repay.
• Loan terms: Shorter loan terms result in higher monthly payments but lower total loan costs. If you take out a small loan with a high interest rate, make sure you pay it back as quickly as possible.
• Funding time: Most loans will take at least a few days to process, although with some loan apps, you can speed up the process by paying a fee.

How to Get a $500 Personal Loan 

The process of getting a $500 loan is the same as applying for any other type of personal loan. Here are the main steps:

1. Find a loan: Make sure you shop around for the best interest rate and the lowest fees.
2. Gather your documents: Most lenders will require you to provide ID, while others may want to see proof of how much you earn.
3. Apply online: Today, most lenders will allow you to apply online. For the loan apps we’ve discussed above, you can apply for a loan directly from the app.
4. Wait: Most loans will take one to three days to process and fund, although some online lenders and loan apps will give you your loan much more quickly.

How Do People Use Personal Loans?

Investopedia commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.

The Bottom Line

The minimum amount for a personal loan is generally around $1,000. You may find loans of lower amounts through lenders such as loan apps, payday loan providers, and cash advances on your credit card. However, these lenders tend to charge higher interest rates than you would find on a personal loan.

Consider checking with the Consumer Financial Protection Bureau (CFPB) for educational resources on small personal loans, or consulting with a free financial professional who may be available through your local financial institution to help you determine which loan may be best for your needs.