Assuming you've exausted all other avenues (asking a friend or family member, bank overdraft, credit card, etc.) let’s look at three ways to get a $500 loan and discuss why personal loans are your best option.
1.) The trouble with $500 payday loans
When people think of same-day loans, payday lenders are what usually come to mind. And while a payday loan will provide you with quick cash, there are many reasons you should steer clear of payday lenders.
What is a payday loan?
In Canada, these are short-term loans usually up to $1,500. These loans come with high fees. It depends on the lender but in some provinces, you must pay it back by your next paycheque, so about 14 days.
These types of lenders are commonly found in brick-and-mortar stores, though they do have a growing online presence as well. The appeal of these lenders is that they offer same-day cash loans with little to no due diligence. This makes them appealing to people in tight spots or with poor credit.
However, that money comes at a price much higher than the initial loan. The short repayment window, as well as prepayment penalties, lead many borrowers into a cycle of debt.
Need instant cash without the risks that come with payday loans? It only takes 2 minutes to apply for your $500 personal installment loan today!
Why you should avoid payday loans
When you take a loan from a payday lender, you pay fees on every $100 that you borrow. This fee ranges from $15 to $25, depending on the province you reside in. Thus, if you borrow $500, you will have to pay back an additional $75 to $125.
These loans also have much higher interest rates than other loan products. Amortized over a year, interest can often reach 500 to 600%.
You may also have to pay yet another fee if your cheque or pre-authorized debit doesn't go through. With all these fees and the short time to repay, a $500 loan can snowball into the thousands very quickly.
Furthermore, it’s worth knowing that if you are unable to pay back your loan on time there are many penalties and consequences including:
- being charged a fee by the payday lender and/or your financial institution if there isn’t enough money in your account.
- a continued increase in the amount that you owe.
- friends, family, or employer being contacted by the payday lender to try to reach you.
- your debt may be sent to a collection agency, damaging your credit score.
- you could be sued for the debt, have your wages garnished, or your property seized by the payday lender or collection agency.
2.) $500 personal loans from traditional lenders
So, you’ve decided you’re not going to take a payday loan. What now? Well, you could consider a personal loan.
What is a personal loan?
With a personal loan, you borrow a fixed sum of money and agree to pay the full amount, interest, and fees back in installments over a set period. Personal loans range from $100 to $50,000 with terms typically between 6 and 60 months. As opposed to something like a mortgage or a car loan, a personal loan can be put towards any kind of expense.
You can get a personal installment loan from:
Traditional banks: This is an excellent place to start if you have good credit. Visit your personal bank first as they may have better interest rates for current customers.
Credit unions: Credit unions typically offer better rates than traditional banks. Keep in mind you’ll need to become a member of the credit union to take advantage of its products.
Online lenders: Trusted online lenders may be the best option if your credit isn’t great and you need money quick. You can shop around for the best rates and apply for a loan from the comfort of your home.
Traditional banks and credit unions aren’t always the best option
While banks and credit unions offer secure loans at lower interest rates compared with payday lenders, there are some downsides to working with traditional financial institutions.
- Loan approval and disbursement may take a few days or longer and can require extensive paperwork and several in-person appointments.
- Costs of operating physical stores may be filtered down to customers in the form of higher rates than some online lenders offer.
- If you have less-than-perfect credit, there’s a good chance that your application will get declined.
What have we learned so far? While payday lenders have less strict criteria for approving customers quickly and can deliver same-day funds, their hidden fees and short repayment cycles make them the most expensive loan products on the market.
On the other hand, traditional lenders such as banks and credit unions offer attractive interest rates and reasonable repayment periods but lack the flexibility to approve more customers or deposit funds quickly.
So what about a personal loan from an online lender?
3.) $500 personal loans from online lenders
The growth of financial technology is transforming the way we manage our money. It means that trusted lenders are starting to emerge with fast approvals and speedy cash transfers (under 24 hours) with flexible and tailored repayment periods. These online lenders are making loans safe and accessible to all Canadians.
How to choose the right online lender
Just as there are trustworthy banks on one side and predatory payday lenders on the other side of the same street, so too are there good and bad lenders online. Thus, it’s wise to do some research before applying for an online loan.
As a rule of thumb, you should avoid payday lenders and lenders that advertise “no credit checks" and "guaranteed approval”. Instead, look for a responsible online lender that works with all credit situations and can provide same-day funds without the vicious debt cycle.
Signs of a trusted lender:
- They have good reviews from other customers on independent third-party sources (Google Reviews, Feefo, TrustPilot).
- The URL on their website is secured and encrypted. The web address will start with "HTTPS" and not "HTTP," with the "s" signifying that the website is secure.
- They can provide fast, same-day funds if needed with loan e-transfer technology.
- There are no hidden fees or upfront costs.
- They have flexible repayment periods that let you pay back the loan as early as you want (to avoid interest charges) or over a longer time period that's comfortable for you.
Get approved for a $500 personal loan online
With loan amounts up to $10,000, repayment periods up to 60 months, and no hidden costs, Fresh Start Finance makes it safe and simple to get a small loan online. Regardless of your credit score, we're committed to helping you get approved and funds deposited to your bank account in hours, not days. Apply now—it only takes 2 minutes!
FAQ about Fresh Start Finance
How long does it take to get approved for a $500 loan?
In most cases, you can get approved and see funds e-transferred straight into your bank account in less than 24 hours. Since Fresh Start Finance is a direct lender without a middleman, the loan process is much quicker than if you apply with traditional lenders.
Is Fresh Start Finance a payday lender?
Fresh Start Finance is not a payday lender. Our personal loans are more flexible and affordable. We don’t run on short repayment periods and there are no hidden fees, meaning you will never fall into a cycle of debt.
Can I get a $500 loan with no credit check?
Fresh Start Finance always does credit checks, but we also approve customers facing all kinds of credit situations.
Pro Tip: Beware of lenders that promise guaranteed approval and no credit checks – as these are common red flags of predatory lending.
What if my credit is bad?
Bad credit doesn’t mean you won’t get approved with Fresh Start Finance. Fresh Start Finance works with people in a wide range of credit situations to help them get the funding they need.
Can a loan from Fresh Start Finance help me rebuild credit?
Yes! Fresh Start Finance reports loan repayments to Canada’s two main credit bureaus, Equifax and TransUnion, so you’ll see your credit score increase if you make all your payments on time. You cannot build credit with a payday loan.
What are loan repayment terms like?
Unlike short payday loan cycles or loans with prepayment penalties, Fresh Start Finance offers flexible repayment plans so you can choose a term that works for your budget and schedule. Pay off your loan as early as you like, or take up to five years, the choice is yours.
Is Fresh Start Finance safe to use?
Headquartered in Vancouver, Fresh Start Finance is a trusted lender that uses state-of-the-art security technology to keep your sensitive data under lock and key. Live representatives are also ready to assist you 24/7 over telephone, text, and e-mail.
The easiest way to apply for a small loan
Gather your essential documents (i.e. recent pay stubs, bank statements, and ID) and then apply online in just 2 minutes! You can also submit an application over the phone by calling 1-888-556-6441.