The Best Lenders for a $500 Personal Loan
Your best bet for personal loans can often be found with credit unions because this type of lender offers a combination of excellent customer service and lower interest rates. Credit unions are not-for-profit membership co-operatives and usually offer better interest rates than banks
However, most have minimum credit scores or income requirements. You also need to have an account with a credit union, but this is usually straightforward to set up. If you have bad credit or no credit score at all, check out our last recommendation, Oportun.
- Navy Federal: Best for military members
- First Tech: Longest repayment period
- Oportun: Good for low or no credit
- PenFed: Best for slightly larger loans
Navy Federal Credit Union
Best for Military Members
4.5
Navy Federal Credit Union Overview
Navy Federal Credit Union is a credit union that offers flexible personal loans. To join, you must be an active-duty service member of any branch of the armed forces, a family member of a service member, a Department of Defense (DOD) employee or a veteran.
You can get a personal loan for as little as $250 and up to $50,000 with competitive interest rates. If you choose terms of up to 36 months, rates are 8.99% to 18% APR as of this writing. APR stands for annual percentage rate, and represents the true cost of a loan – both interest rate and fees.
Loans with repayment periods of 37 to 60 months have APRs of 15.29% to 18.00%. Navy Federal has no origination fees. They don’t offer an automatic payment discount, but you can pay off your loan early with no prepayment penalty.
Pros & Cons
Pros Same-day funding available via direct deposit, the fastest funder of all our picks Fast and simple online application process Cons No prequalification available — hard credit score inquiry required for rates Late fees apply — $29 if your payment is late
Navy Federal Eligibility Requirements
In order to become a Navy Federal member, you must be a current or former service member, a DOD employee or a service member’s family member. Navy Federal uses your housing, income and employment history to assess eligibility for a loan. You’ll also be required to open and maintain a savings account at this credit union to secure membership.
First Tech Federal Credit Union
Longest Repayment Period
First Tech Federal Credit Union Overview
First Tech is a federal credit union based out of Oregon that operates nationwide. You can get personal loans from $500 to $50,000 with repayment terms from two to seven years. Interest rates as of this writing range from 9.74% to 18.00% APR. You’ll get the lowest interest rates for a 24-month repayment term. First Tech doesn’t charge origination fees for personal loans and there are no penalties for prepayment.
Pros & Cons
Pros Prequalify with no impact on your credit score First payment deferrable for up to 45 days Cons Shortest loan term is two years
First Tech Eligibility Requirements
If you use the online personal loan application and are approved, you will automatically become a member of First Tech Credit Union. First Tech will set up a savings account with $5 and pay your first-year membership fees at a local organization required for credit union membership (you’ll still belong to the credit union if you decide not to renew your membership the following year).
To apply for a loan, you’ll need your Social Security number, address, phone number and information on your income and assets. First Tech doesn’t publish a minimum credit score but takes your credit history into account when you apply.
Oportun
Good Option for Low or No Credit
2.8
Oportun Overview
Oportun is the only lender on this list that is not a credit union. Oportun offers short-term loans targeted to people without good credit. Interest rates start at 30.99% APR and can run as high as 35.99% APR – by far the highest on this list. It charges an 8% administrative fee on all installment loans, which is bundled into your APR, and offers payback terms from 12 to 54 months.
Pros & Cons
Pros Personal loans from $300 up to $10,000 Lending eligibility doesn’t hinge on credit score Cons Highest interest rates on this list, going as high as 35.99% Lower maximum borrowing limit than other lenders on this list
Oportun Eligibility Requirements
Oportun doesn’t require a credit score. You’ll need to show a valid photo ID and pay stubs or bank statements. Oportun requires you to provide four personal references to vouch for your ability to repay your loan.
PenFed Credit Union
Best for Slightly Larger Loans
4.8
PenFed Overview
PenFed offers small personal loans starting with competitive APRs from 7.99% to 17.99% as of this writing. Its loans start at $600 – slightly higher than the $500 mark, but it’s well worth the extra $100 if you can afford it, according to us at MarketWatch Guides.
PenFed is the second-largest federal credit union in the country. While some credit unions have eligibility requirements, PenFed has an open charter — so anyone can join.
PenFed offers loans up to $50,000 with no origination (closing) fees. The lender has repayment periods of one to five years. After you’re verified, you’ll get your money in one to two days. There are no discounts for automatic payments, but you can pay off your loan early with no penalty. PenFed offers loans in all 50 states.
Pros & Cons
Pros Low interest rates and APR, starting at 7.99% — the lowest interest rates on our list Ability to receive multiple offers online without affecting your credit score Fast approval — funds disbursed as soon as the next business day Cons No published minimum credit score to qualify Late fees apply — $29 fee if your payment is more than 5 days late
PenFed Eligibility Requirements
PenFed doesn’t publish a minimum credit score but generally looks for minimums in the upper 500s. PenFed will also check your income and debt-to-income (DTI) ratio, which is all your monthly debt payments divided by your gross monthly income. They’ll ask for recent paystubs, bank statements or tax returns. They’ll also need a copy of your photo ID, passport or utility bill to verify your identity. You don’t need to be a member to apply for a loan, but if you’re approved, PenFed will set up a membership for you.
Summary: The Best Lenders for a $500 Personal Loan
| PenFed | NavyFed | First Tech | Oportun | |
|---|---|---|---|---|
| Loan Amount | $600-$50,000 | $250-$50,000 | $500-$50,000 | $300-$10,000 |
| Origination Fees | $0 | $0 | $0 | 8% of principal loan amount |
| Loan Terms | Up to 60 mos. | Up to 60 mos. | 24-84 mos. | 12-54 mos. |
| Automatic Payment Discount | No | No | No | No |
| States Operating | All | All | All | 41 in-person, 50 online |
| Membership | Open | Service members and their family, DOD employees, veterans | Several organizations in Oregon or related to an existing member | N/A |
| Interest Rates (APR) | 7.99%-17.99% | Up to 36 mos. 8.99%-18%, 37-60 mos. 15.29%-18% | 8.99%-18% | 30.99%-35.99% |
| Minimum Credit Score | Not published; upper 500s a general minimum | Not published; uses housing, income and employment history for qualification | Not published; 600-620 a general minimum, uses income info and DTI ratio for qualification | Not published and not mandatory; other info considered for qualification |
| Funding Timeline | 1-2 business days (direct deposit, ACH); 5-7 business days (check) | Same day (direct deposit, ACH) | Generally same day (ACH), up to 2-3 business days | 1-2 business days (ACH) |
How To Get a $500 Personal Loan
A $500 personal loan is considered a short-term installment loan, which means you’ll usually pay it back within one to five years. Most personal loans are unsecured, so you won’t have to put up any collateral, like your car or house, to qualify. In some cases, you can put up collateral to get better interest rates. If you have poor credit or can’t qualify on your own, many lenders will allow you to find a co-signer to guarantee your loan.
Applying for a $500 Personal Loan
Applying for a $500 personal loan is similar to applying for other types of loans. The entire process can be completed in as little as a few minutes, as long as you have all the necessary paperwork ready.
Here are three things to consider:
- Shop around: First, do your research and decide which loan is best for you. Most of our recommendations allow you to check rates without a hit to your credit, so make sure to check several lenders to find the best rate.
- Gather paperwork and apply: Most institutions have online applications. You’ll need to have recent pay stubs, bank statements, retirement statements or tax returns ready, depending on your income. You’ll need to prove your identity with a driver’s license, Social Security card or utility bill.
- Receive money: If you’re approved, you’ll typically see funds within one to two business days, although some lenders can take longer. If you’re receiving a check in the mail, that may take around five to seven business days. If your loan has any fees, those will be taken out of your loan settlement.
Requirements for a $500 Personal Loan
In order to be approved for a $500 personal loan, you’ll need to prove you have enough income to repay the lender. Many lenders require a minimum credit score of 580, although others will qualify you through income and bank statements. You’ll need to be able to show a DTI ratio of 35% or less. If you have a DTI ratio that’s higher than 50%, you may have to consider a secured loan (where you put up collateral like a vehicle or savings account) or find a co-signer.
The better your credit score, the lower interest rate you generally get. If you have a score below 580 or don’t have a credit score, you’ll pay a higher interest rate and are more likely to be charged fees.
The longer your loan term, the more overall interest you’ll pay, even if your interest rate is lower. It’s usually better to pick a shorter repayment period if you can accommodate the monthly payments because you’ll likely pay less interest overall.
Alternatives to a $500 Personal Loan
Personal loans can have higher interest rates and fees that make them expensive (the average rate for unsecured personal loans in the first half of 2023 was 11.48%). Research your options, and see if any of the following loan options may better suit your needs.
If you own your home and have built up at least 20% equity, ahome equity line of credit(or HELOC, for short) may be a better option than a personal loan. HELOCs are revolving loans (like credit cards) that are there when you need them but don’t charge interest unless you use them. Even though HELOCs have variable interest rates, meaning your interest rate will change with the market, you’ll generally pay a lower interest rate than you would with a credit card or personal loan because HELOCs are secured loans — you use your house as collateral. The loan process for a HELOC is usually more involved than the loan process for a personal loan. The downsides of a HELOC are a long application process and the possibility of losing your home to foreclosure if you can’t keep up with your HELOC payments.
Ahome equity loanis similar to a HELOC, but is a fixed-rate loan. You take out a set dollar amount once, then pay it back over time with the same interest rate. The minimum home equity loan is generally much higher than a personal loan, starting around $10,000. To qualify for a home equity loan, you’ll need to own your own home and have at least 20% equity through your down payment or appreciation. Home equity loans can have a complex application process and also use your home as collateral, so if you fall behind on your home equity loan payments you could lose your house.
Peer-to-peer (P2P) lending is another option if you have bad credit or can’t qualify for another type of installment loan like a personal loan. P2P lending has been around since the early 2000s and connects borrowers and lenders directly through online sites like LendingClub, Prosper or Upstart (but you’ll be anonymous to lenders). If you’re a borrower looking for a personal loan, you can typically borrow up to $35,000. You’ll need to provide your Social Security number, information on income and tax returns in your loan request. The site will run a credit check, and the process generally takes two to three days to complete. Keep in mind that P2P loans can come with origination fees, and if you have poor credit, you’ll probably pay higher interest rates than with another type of loan.
Things To Consider When Applying for a $500 Personal Loan
- You have options, even during a financial emergency. Do your research for the best possible rate since you will have to pay your loan back on top of your other financial obligations.
- If you need funds quickly for a car repair, medical bills or a new phone, you can receive money from a personal loan as fast as the same business day your loan is approved.
- Save up for the expense instead of taking out a loan, if possible, since repayments can take a big chunk out of your paycheck.
- Loans with lower interest rates but longer repayment periods cost more over the life of the loan. Shorter repayment times usually cost less, even if monthly payments are higher.
- If you’re denied a loan, explore ways to build your credit score. You are able to check your FICO score for free each year with the three credit bureaus (Experian, TransUnion and Equifax).
Frequently Asked Questions About $500 Personal Loans
Lenders on our list have repayment periods from six months to seven years. Most credit unions don’t charge a prepayment penalty if you pay back your installment loan early.
While many lenders want to see credit scores of at least 580, some lenders will lend to you based on proof of income and employment history. If you have bad credit or no credit, you will probably end up with a higher interest rate and more fees.
The smallest personal loan you can get from our online lenders is $250. There are lenders who offer smaller loans, but these generally come with very high interest rates for borrowers. Payday loans are an example, but we do not recommend them.
All four of our top picks can distribute funds within one to two business days, with several able to provide you with same-day funding. Even though many traditional banks are lending less to consumers, credit unions can still be a solid source for small personal loans. Most offer online applications and some have same-day funding. Our recommended lenders generally offer much more competitive interest rates than payday loans or a cash advance from your credit card.
Methodology: Our System for Ranking the Best Personal Loans
Our team put together a comprehensive 100-point rating system to evaluate personal loan companies. We gathered data points from 28 of the most prominent lenders in the U.S. and analyzed disclosures, licensing documents, sample loan agreements, marketing materials and websites. Our rating system takes into account four broad categories.
- Affordability (35%): How expensive each company’s loans are to pay back
- Loan features (35%): The breadth of loan terms and features available to prospective customers
- Customer experience (20%): Ease of application, prequalification and customer service interactions
- Company reputation (10%): An exploration of lenders’ Better Business Bureau files, customer reviews and outstanding regulatory actions
Our top-rated lenders may not be the best fit for all borrowers. To learn more, read our full personal loans methodology.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
If you have feedback or questions about this article, please email the MarketWatch Guides team ateditors@marketwatchguides.com.
Laurie SepulvedaSenior Content Writer
Laurie Sepulveda is a Senior Content Writer who specializes in writing about personal finance. She’s lived, taught and written about personal finance for over a decade. Laurie lives in North Carolina with her family and spends her free time playing Wordle and dreaming about travel.
Jared MacarinEditor
Jared is an editorial veteran who joined Home Solutions after more than 20 years in the newspaper industry. He has written, edited or designed more than 50 newspapers across the country, winning numerous awards. Jared has also edited and wrote for Forbes Advisor, Lending Tree, The Streamable and Lonely Planet. When he isn’t working, Jared enjoys spending time with his wife on outdoor adventures, watching sports and reading.
