Compare £500 short term loans

If you’re looking to borrow £500, we explore how short term loans work to see if they are right for you.

Compare £500 short term loans

How much do you need to borrow?


How long do you need to borrow for?


1 - 4 of 4
Name Product Available Amounts Monthly repayment Total payable Link
QuidMarket Short Term Loan
£300 to £1,500
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Representative example: Borrow £300 for 3 months at a rate of 292% p.a. (fixed). Representative APR 1302.3% and total payable £454.38 in 3 instalments of £151.46.
The Money Platform Short Term Loan
£100 to £1,000
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Representative Example: Borrow £500 for 6 weeks with repayment method of One Payment. Total amount payable: £647. Representative 839.20% APR, interest rate 255.5% per annum.
Moneyboat Short Term Loan
£200 to £1,500
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Representative example: Borrow £400 for 4 months at a rate of 255.5% p.a. (fixed). Representative APR 939.5% and total payable: £597.48 in 4 payments of £149.37.
Lending Stream Instalment Loan
£50 to £1,500
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Representative example: Borrow £200 for 6 months at a rate of 292% p.a. (fixed). Representative 1,333% APR and total payable £386.61 in 6 monthly payments of £64.44.
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Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.
Table: promoted deals, sorted by total payable

We compare payday/short term loans from

Drafty Line of Credit
QuidMarket Short Term Loan
The Money Platform Short Term Loan
Moneyboat Short Term Loan
Lending Stream Instalment Loan

Getting accepted for a loan generally depends on your credit history and financial circumstances. However, a number of lenders offer short term loans of £500 to those with good, fair or bad credit. In fact, many short term lenders place less focus on your credit history and are more interested in your affordability.

This guide compares the best £500 loans on the market and explains what to watch out for.

Overview

You might need a £500 short term loan if you need cash to tide you over until the next payday, or you need to cover emergency expenses or an unexpected bill. Typically, you need to repay the loan, plus interest, within 6 to 9 months, although some lenders offer short term loans of up to 12 months. These short term loans tend to come with very high interest rates.

What are my options when borrowing £500?

If you’re looking to borrow £500, you usually need to apply with an online specialist lender. High street banks don’t tend to offer loans of this size. There are a number of online lenders to choose from, so make sure you compare interest rates and terms carefully.

Short term loans can be very expensive. However, in 2015, the Financial Conduct Authority (FCA) introduced a price cap, which means the maximum interest a short term lender can charge for a loan is 0.8% interest per day. On a loan of £500, that works out to be £4 a day. Borrowers must also not be charged more in fees and interest than the original amount borrowed. So if you’ve borrowed £100, the maximum interest you can pay is £100.

How do short term loans work?

Short term loans typically need to be repaid within a few months. Most lenders require you to pay back the loan within 6 months, but you might be able to opt for 9 months or even 12 months in some cases. The quicker you pay back your loan, the less you pay in interest. But a shorter loan term means your monthly repayments will be higher, so make sure they are still affordable.

If you’re accepted for a short term loan, the money is often transferred to your bank account within an hour.

Short term loans are unsecured, so you won’t need to use an asset, such as your home, as collateral (as you would with a secured loan). However, this means they are riskier for the lender, and so interest rates are often higher.

Interest rates are usually fixed for the loan’s duration, which can make it easier to budget. On the other hand, if your loan has a variable interest rate, the interest rate and the amount you repay each month could go up or down.

With each instalment, you pay off part of the capital (the amount you have borrowed), as well as the interest you have accrued so far. Your loan repayments might be taken by direct debit, but some lenders use a continuous payment authority (CPA). This means funds are automatically deducted from your account on the scheduled days. Make sure you check.

How to get a £500 loan

To help you get a £500 loan, take a look at the steps below:

1. Work out how much you need to borrow

First of all, consider how much you really need to borrow. Do you need to borrow as much as £500, or could you cope with a smaller amount? The less you borrow, the less you pay in interest.

2. Work out how long you need to borrow for

It’s also important to consider the length of the loan term. Short term loans typically last less than 12 months. But if you can pay off your loan in 3 months, you’ll pay less in interest compared to someone with a loan for 6 months. Just remember that your monthly repayments will be higher, so you need to ensure you can afford to keep up with them.

3. Check your credit score

You’re more likely to secure a lower loan rate if you have a good credit score, so it’s sensible to check your credit score before you apply. This gives you an idea of how likely you are to be accepted for the best rates.

You can check your credit score for free through services such as Experian, Equifax and TransUnion. Taking steps such as paying bills on time, registering on the electoral roll and correcting mistakes on your credit report can help to give your credit score a boost.

4. Compare lenders

Next, take some time to compare the different lenders and the different loan rates they offer. It’s important to understand exactly how much interest you’ll pay and if there are any fees for applying. It’s also worth reading the reviews of each product to make sure you choose the right loan for you.

5. Apply for your loan

Before you apply for your loan in full, it’s worth using an eligibility checker. Many lenders offer eligibility checkers that tell you how likely you are to get accepted for a particular loan without affecting your credit score. You can then make your application in full online. This involves a hard credit search, which shows up on your credit file for other lenders to see. Once you’re accepted for the loan, your funds are usually transferred that day – often in less than an hour.

Can I get a £500 loan with bad credit?

Yes, many online lenders offer £500 loans if you have bad credit. However, you still need to pass the lender’s affordability checks, and you’re likely to pay a higher interest rate compared to someone with good credit.

Loans for bad credit

Can I get a £500 loan with no credit check?

No, all authorised lenders are required to carry out a hard credit check when you apply for a £500 loan. You should be wary of any lender that says it offers loans without a credit check, as they are unlikely to be legitimate. Always ensure your lender is listed on the Financial Services Register, as this means the lender has been authorised by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA).

How to compare £500 loans

As part of your comparison, keep the following factors in mind:

  • The interest rate. The annual percentage rate, or APR, for short term loans can be particularly high – in fact, it can often exceed 1,000%. However, remember the FCA has capped the amount of interest you can be charged with a short term loan, plus you’ll only be borrowing over a few months, not years. APRs are calculated on a one-year term, which can make already-high rates seem even higher. It also takes into account both the interest rate and charges.
  • The length of the term. Short term loans are typically taken out over a matter of months. The shorter the term, the quicker you’ll repay the loan and the less you’ll pay overall.
  • Total amount payable. It’s important to look at the total amount payable by the end of the loan term, as this factors in both the amount borrowed and the amount of interest charged. This can help you to work out which loan works out cheapest overall.
  • Eligibility. You usually need to be at least 18 years old, a UK resident and have a current account to be eligible for a short term loan. Most lenders also want to see that you are employed and have a steady income.
  • Early repayment terms. Check whether your lender permits early repayments or whether there are any restrictions. You can often pay off a short term loan early without paying a penalty.
  • Fees. You won’t usually be charged an upfront product or application fee with a short term loan, but you will usually be charged for late payments. These fees can be high, and late payments can also affect your credit score.

What are the alternatives to a £500 short term loan?

If you only need to borrow £500, it’s well worth exploring the alternatives before choosing to apply for a short term loan. For example, you could use an overdraft. If you don’t already have one on your current account, you should be able to apply for one with your bank fairly easily, and your overdraft is often ready to use instantly. Interest rates can be high – often around 39.9% APR – but this could be cheaper than a short term loan.

Alternatively, you could use a credit card. This enables you to borrow funds as and when you need them, and monthly repayments are flexible. You might even qualify for an introductory 0% period, which means you won’t pay interest on your spending for a number of months. But even if you can’t get a 0% deal, credit card interest rates are still likely to be lower than those on a short term loan.

Bottom line

Short term loans are generally not the best way to borrow money as they often charge high rates of interest. However, if you’re strapped for cash and need to borrow £500, they are a convenient and quick way of getting you the money you need. Just be sure to compare your options carefully, choose the loan with the lowest interest rate and repay your loan as quickly as you can.

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.

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