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What is a $500 payday loan?
A $500 payday loan is a short-term loan that can be quickly approved and quickly paid out to you - but which comes with high fees.
Australians generally use $500 payday loans to cover pressing expenses, such as rent or an electricity bill.
What is a $500 bad credit payday loan?
A $500 bad credit payday loan is a short-term loan that is available to people with bad credit histories.
Lenders generally prefer to deal with borrowers who have good credit histories, because they’re considered to be more likely to repay the loan and therefore less of a risk. However, there are some lenders in Australia that will issue $500 payday loans to people with bad credit.
Who offers $500 payday loans?
If you want a $500 payday loan, you’ll have to speak to a smaller provider that you may not have heard of, rather than a well-known lender. Banks and credit unions generally avoid payday lending; instead, it’s done by smaller non-bank lenders, which are often online-only providers.
How do you take out a $500 payday loan?
The most common way to apply for a $500 payday loan is over the internet. Generally, the payday lender will want to gain an understanding of your identity and financial position, and so will ask for your name, date of birth, address, driver’s licence number, employment details and income.
How long does it take to get a $500 payday loan?
Depending on the lender, your $500 payday loan application may be assessed and paid out within minutes. However, depending on your bank, it might take a couple of business days before the money lands in your account.
How much will a $500 payday loan cost?
Payday lenders aren’t allowed to charge interest. Instead, they make money by charging fees - which are usually steep. These fees may include:
A one-off establishment fee of up to 20 per cent of the loan amount
A monthly account-keeping fee of up to 4 per cent of the loan amount
A government fee
A penalty fee if you default on the loan
What are the pros and cons of $500 payday loans?
$500 payday loans are a double-edged sword: they’re designed to quickly solve a problem - but at a high price.
If you need money in a hurry, a $500 payday loan might be suitable, given that your application could be assessed and authorised within minutes.
However, that quick money would come with high fees attached - so high that the cost of ‘buying’ the money might be equivalent to paying an annual interest rate of more than 700 per cent.
Repayment scenarios for a $500 payday loan
Here’s how much you’ve have to repay if you were charged the maximum 20 per cent establishment fee and maximum 4 per cent monthly fee:
1-month loan term = $620
2-month loan term = $640
3-month loan term = $660
4-month loan term = $680
5-month loan term = $700
6-month loan term = $720
Can you get a $500 payday loan if you're on Centrelink?
Some lenders will give you $500 payday loans if you’re on Centrelink benefits - even if you have bad credit.
However, you can’t assume that all payday lenders will be willing to issue loans to people on Centrelink benefits, because each lender has its own policies. Also, even when lenders are willing to lend to Centrelink recipients, they might only do business with select individuals based on their unique financial circumstances.
Can self-employed people get $500 payday loans?
Yes, some lenders are willing to give $500 payday loans to people who are self-employed. Typically, self-employed borrowers are regarded as riskier, because their income seems less reliable. However, there are some payday lenders that take a more open mind to self-employed borrowers and are willing to give them loans.
Nick Bendel is RateCity’s property and personal finance editor, and an experienced journalist with numerous writing credits to his name. To date. He covers property, home loans, credit cards, superannuation and other bank products, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan – however, the process is easier and faster than taking out a mortgage.
Loan sizes usually range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.
How much can you borrow with a bad credit personal loan?
Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans – they also get loaned less money. Each lender has its own policies, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.
Credit ratings/scores are calculated by credit reporting bodies such as Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service. These are separate organisations, so they use different systems.
Equifax gives scores between 0 and 1,200:
833 to 1,200 = Excellent
726 to 823 = Very good
622 to 725 = Good
510 to 621 = Average
509 or less = Below average
Dun & Bradstreet (through the Credit Simple service) gives scores between 0 and 1,000:
800 to 1,000 = High end
700 to 799 = Great
500 to 699 = Average
300 to 499 = Room to improve
299 or less = Low
Experian gives scores between 0 and 999:
961 to 999 = Excellent
881 to 960 = Good
721 to 880 = Fair
561 to 720 = Poor
0 to 560 = Very poor
The Tasmanian Collection Service doesn’t give scores. Instead, it prepares credit reports for credit providers and then lets those providers make their own assessment.
Can I get guaranteed approval for a bad credit personal loan?
Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application.
It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit, because there’s a higher likelihood that the personal loan will be repaid.
So a borrower with good credit is more likely to have a loan approved and to get that approval faster, while a borrower with bad credit is less likely to have a loan approved and to get that approval slower.
Many personal loans, much like home loans, can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.
If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.
Can I get a self-employed personal loan with bad credit?
It may be much more difficult for a self-employed borrower to successfully apply for a personal loan if they also have bad credit. Many lenders already consider self-employed borrowers to be riskier than those in full time employment, so several self-employed personal loans require borrowers to have excellent credit.
If you’re a self-employed borrower with a bad credit history, there may still be personal loan options available to you, such as securing your personal loan against a vehicle of equity in a property, though your interest rates may be higher than those of other borrowers. Consider contacting a lender before applying to discuss your options.
Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.
A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent, without worrying about ending up out of pocket if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.
What are the pros and cons of bad credit personal loans?
In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts in such a way that it makes it easier for them to repay those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate.
However, this strategy can backfire if the borrower spends the extra money instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.