Advantages and Disadvantages of Availing a 500 pound Loan

What Does a 500 pound Loan Mean?

In order to meet a financial emergency that requires immediate attention, a person may be in need of a 500 pound loan. These loans are short term loans that provide a solution to your urgent financial need. A person must ensure that their financial difficulty is serious enough to actually require this specific amount of loan.

Usually, there is no restriction as to where the 500 pound loan amount can be used by the borrower. It is strongly advised that this type of loan is used only to resolve a financial emergency. Apart from emergencies, the 500 pound loan is generally used by individuals for things they might deem as essential on a daily basis. Mentioned below are a few examples of when this loan is acquired.

• Reparations at home (For example, the television, washing machine, etc).




• Paying for private medical bills.




• Reparations for vehicles such as your motorcycle or car that is used on a daily basis.

What are the Advantages of Availing a 500 pound Loan?

Instant access to funds

The main advantage of a 500 pound loan is the instant availability of funds. This loan can be the perfect solution in case you do not have access to any other means of borrowing. Moreover, these loans also have to be repaid quickly, usually in about 6 months. Unlike other loans, a person who avails a 500 pound loan does not have to worry unless they do not make the repayments on time.

Can be approved for people with a bad credit history

There are many people who have a low credit score and have been previously rejected for a loan by many lenders. However, there are a handful of lenders who specialize in providing you with a short term 500 pound loan despite having a poor credit history. There are many credit suppliers who also offer these loans online as well. The short lenders will always conduct a credit check but that does not mean that people with poor credit will not be approved for this loan.

Easy loan application

A person can either apply for a 500 pound loan in-store or through an online process. For most people, applying online for this type of loan is the quickest method and is most preferred. It generally takes up to 5 minutes to fill out the online form and submit it. The form will contain certain questions which allow the lender to check your creditworthiness and reliability on previous financial matters so that they are sure about you being a suitable candidate.

When you are applying for a 500 pound loan in-store, the judgment for approval is slower than the online process. The advantage however, is that the credit suppliers are normally more comfortable to lend you the money as there is face-to-face contact.

Early repayment to save money on interest

Usually, the majority of people who acquire the 500 pound type of loan are able to repay the whole amount or a larger amount than the monthly installments, before the designated time. This way, they are able to save money on interest.

What are the Disadvantages of Availing a 500 pound Loan?

High-Interest rates

Despite lenders being able to give fast and easy credit for a short term, these loans might generally not prove to be feasible. They should only be considered as a last resort, specific details need to be outlined such as how much is the interest required to be paid and the duration provided to pay back the loan amount. These 500-pound loans are referred to as ‘high-cost short term loans’ because the payback amount is generally more expensive when compared to other loans.

Getting caught in a debt-cycle

Sometimes, borrowers will return to the credit supplier on account of not having the money required to pay back the loan. The credit supplier will either cancel the loan or grant an extension of 2 weeks to repay the amount due but will charge a compensation fee for the same, this is called a rollover.

After the first rollover, if the person is still unable to pay, the expenses of the person will keep increasing (compensation fees, late fees, etc.). The borrower has to then, obtain an additional loan in order to clear the pending ones, thereby getting trapped in a cycle of debt. Once in a debt-cycle, it could prove to be financially dangerous and tarnish your credit score.

Not advisable for a long period of time

These 500-pound loans are meant to be used in a short period of time to clear a financial emergency. However, if used to solve a long term problem, it may prove to be quite expensive. The high-interest rates over a long period can build up rapidly if overlooked.

Online lending might prove to be risky

Most people who avail a 500 pound loan do so through online lenders rather than from the in-store. There are higher chances of fraud and identity theft when relying on online lenders which increases the probability that your personal financial information might be sold to brokers who in turn, sell it to other money lenders. When availing a 500 pound loan online, exercise caution and choose a secure method from a reputed online lender.