How a 500 Payday Loan Works
A payday loan woud definately qualify as a fast cash loan, and almost any lender will be willing to lend out $500 as long as you meet the following three criteria:
- You need to have a job. While the job does not need to be great, you do need to make around $1,000 per month in order to qualify for the small loan (some lenders will require slightly less). In addition, you will be asked to prove this income somehow – if you are taking out an online 500 personal loan than you will either need to fax in copies of 2 or 3 paychecks or bank statements showing direct deposits for the last couple of months from your employer. If you are taking out the loan from a brick and mortar lender then you can simply bring this information with you when you go to apply for the loan.
- You will need to be over the age of 18 (legal age) to take out a payday cash loan. Loans are not allowed to be made to minors.
- You will need to have a valid checking account, and that account will need to have been opened and in good standing for several months (some require around 6 months). This is the account that online lenders will deposit funds into and collect money from. Brick and mortar lenders will require you to write them a post-dated check out of this account, due around the time of your next paycheck.
As you can see, there are no checks on your credit in order to qualify for the loans, which is why many people looking to take out a 500 loan with bad credit look first to payday lenders for access to capital – many times they are their only option for fast cash loans under $1000.
What is the Cost of a 500 Loan?
So what is the cost if you decide to borrow $500 from a payday loan lender? Well, given that you are taking out a 500 loan no credit required, then you need to expect to pay more – a lot more – than a traditional loan. There are no loans that are just a few percentage points higher than LIBOR. In fact, you can expect costs for payday loans to be very similar to the amounts shown on the following chart:
As you can see, these loans are not cheap – far from it by any standard. In addition, these costs are costs that you have to pay back within just a few short weeks – most cases in two weeks or by your next paycheck. So what does this tell you about taking out payday loans? It tells you that you should only do so if 1) you really, really need the money (i.e. it’s an absolute emergency), and 2) you can pay the loan back BY THE TIME IT’S DUE. This is where most people get into trouble, so take notes. Only take out a payday loan for 500 (or any amount for that matter) if you know for certaintly that you can pay it back with your next paycheck. Obviously, this is going to be much harder if you are taking out a 2500 loan than if you are just taking out $500…but that doesn’t mean it won’t be difficult, so be careful.