£500 loans

£500 is the amount people ask for more than any other. It is large enough that the term makes a real difference to the cost, but small enough that it should be possible to clear it within a year. This page shows how the numbers change with the term, what a lender will look at, and when a loan is the wrong answer. We are a credit broker, not a lender, and it is the lender that sets the rate and term it offers.

Why £500 is the typical request

In our Borrowing Barometer data, the median amount requested was £500, and it was the median in every UK region. More than half of all applications (54%) were for £500 or less. For applications between £301 and £500, the stated reasons were:

How the term changes what £500 costs

Reading the table:

• Over 6 months, the interest is about £101.38, around a fifth of what you borrowed.
• Over 18 months, it is about £302.98, roughly three-fifths.
• Over 36 months, it is £664.96, more than the £500 itself.

Going from 18 months to 36 saves £12.25 a month but costs £361.98 more overall. For an amount this size, a term of a year or less keeps the cost in proportion. The rate you are offered may be higher than our representative rate, which would make the longer terms cost even more.

Representative Example: Borrow £1,000 over 18 months. 18 monthly repayments of £89.22. Total amount repayable: £1,605.96. Interest: £605.96. Annual interest rate: 59.97% (fixed). Subject to application approval by the lender. Not all lenders offer loans up to £5,000. Representative APR 79.5% (Variable). Any representative monthly repayment shown is for illustration only, based on our representative APR. Your actual repayments will be confirmed by the matching lender if your application is approved.

What a lender looks at for £500

Each lender has its own criteria, but for £500 most will look at:

• Your income, how often it is paid, and whether it can be verified, for example through payslips, bank statements or open banking.
• The credit you already repay. In our data, 75.4% of applications with complete figures came from people already repaying other credit, with a median of £150 a month. The lender adds that to the new repayment.
• Your recent credit history, especially missed payments, defaults or payment arrangements in recent months.
• Signs of strain in your bank account, such as returned direct debits or regular use of an unarranged overdraft.

When £500 of credit is the wrong answer

A loan works best for a one-off cost. It is the wrong tool if you plan to use it to repay another loan, if you are short every month, or if you are already behind on priority bills. In those cases, free debt advice from StepChange, National Debtline, Citizens Advice or MoneyHelper can do things a loan cannot, such as agreeing reduced payments with the people you owe. For a short gap, a credit union loan or an arranged overdraft may also cost less.