5 Loan Types and What To Know (2024)

If you need cash before your next paycheck, there are places you can turn. You can get a $500 loan via a personal loan, payday loan, payday alternative loan, cash advance app, or credit card cash advance. However, some options are better than others.

Some small loans come with high costs that can cause financial hardship. For example, payday loans often have triple-digit annual percentage rates (APRs), such as 400%. While one may help you get to your next paycheck, repaying it could put you further behind.

However, not all small loans are expensive. Compare APRs, fees, payment amounts, and repayment periods to find a $500 loan that comfortably fits your budget.

Compare Rates Now

1. Personal loan

A personal loan is a lump-sum loan that’s repaid through monthly installments over a set term, usually between two and seven years. While many lenders offer loan amounts starting at $1,000, you can find a few lenders that will lend you $500. For example, Navy Federal Credit Union offers personal loans as low as $250, with APRs from 8.99% to 18%, depending on your credit, and terms up to 60 months. PenFed offers loans as small as $600, with APRs from 8.49% to 17.99%, and terms up to 60 months.

Compared to other small loan options, personal loans tend to offer longer repayment periods and lower APRs. That said, they can be more difficult to get if you have bad credit. But most lenders offer quick online applications so you can see if you prequalify within minutes (and without hurting your credit score). Just remember that prequalification is not an offer of credit, and when you submit a formal application the lender will conduct a hard credit check, which can temporarily drop your score a few points.

Advertiser Disclosure

4.24.2

Credible rating

Fixed (APR)

6.99% - 25.49%

Loan Amounts

$5000 to $100000

Min. Credit Score

700

Check Rates

on Credible’s website

View Details

Overview

Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.

Unlike most lenders, Lightstream does not let you prequalify on its site. Nor does it provide a contact phone number next to its customer service hours on its website.

Loan amount

$5,000 to $100,000

Repayment terms

2 - 12 years, depending on loan purpose

Fees

None

Discounts

Autopay

Eligibility

Available in all states except RI and VT

Min. income

Does not disclose

Customer service

Email

Soft credit check

No

Time to get funds

As soon as the next business day

Loan uses

Credit card refinancing, debt consolidation, home improvement, and other purposes

Read full review

3.93.9

Credible rating

Fixed (APR)

7.80% - 35.99%

Loan Amounts

$1000 to $50000

Min. Credit Score

620

Check Rates

on Credible’s website

View Details

Overview

Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.

Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.

Loan amount

$1,000 to $50,000

Fees

Origination fee

Discounts

None

Eligibility

Available nationwide

Min. income

$12,000

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

As soon as 1 to 3 business days

Loan uses

Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes

Read full review

4.44.4

Credible rating

Fixed (APR)

-

Loan Amounts

$2500 to $40000

Min. Credit Score

660

Check Rates

on Credible’s website

View Details

Overview

Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.

Funds are available as soon as the next business day after loan approval.

Loan amount

$2,500 - $40,000

Repayment terms

3 - 7 years

Fees

Late fee

Discounts

None

Eligibility

Available in all 50 states

Min. income

$40,000

Customer service

Phone

Soft credit check

Yes

Time to get funds

Funds can be sent as soon as the next business day after acceptance

Loan uses

Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Read full review

4.54.5

Credible rating

Fixed (APR)

8.49% - 35.99%

Loan Amounts

$1000 to $50000

Min. Credit Score

600

Check Rates

on Credible’s website

View Details

Overview

Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.

However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.

Repayment terms

2 to 7 years

Fees

Origination fee

Discounts

Autopay and direct pay

Eligibility

Available in all states

Min. income

Does not disclose

Customer service

Email

Soft credit check

Yes

Time to get funds

1 business day

Loan uses

Credit card refinancing, debt consolidation, home improvement, major purchase, other

Read full review

44

Credible rating

Fixed (APR)

8.98% - 35.99%

Loan Amounts

$1000 to $40000

Min. Credit Score

660

Check Rates

on Credible’s website

View Details

Overview

LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)

While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.

Loan amount

$1,000 to $40,000

Fees

Origination fee

Discounts

None

Eligibility

Available in all 50 states

Min. income

None

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

Within 3 days

Loan uses

Debt consolidation, paying off credit cards

Read full review

4.94.9

Credible rating

Fixed (APR)

8.99% - 29.99%

Loan Amounts

$5000 to $100000

Min. Credit Score

Does not disclose

Check Rates

on Credible’s website

View Details

Overview

SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number.

The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.

Loan Amount

$5,000 to $100,000

Repayment terms

2 - 7 years

Fees

Option to pay an origination fee (up to 6%) in exchange for a lower rate

Discounts

Autopay, direct pay

Eligibility

Available in all states

Min. income

Does not disclose

Customer service

Phone, email, live chat

Soft credit check

Yes

Time to get funds

Typically within a few days, given approval and bank account verification, but sometimes within the same day

Loan uses

Solely for personal, family, or household uses

Read full review

44

Credible rating

Fixed (APR)

8.99% - 35.99%

Loan Amounts

$2000 to $50000

Min. Credit Score

600

Check Rates

on Credible’s website

View Details

Overview

Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.

Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).

Loan amount

$2,000 to $50,000

Fees

Origination fee, late fee, unsuccessful payment fee, check processing fee

Discounts

None

Eligibility

Available in all states except DC, IA, VT, and WV

Min. income

None

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

As soon as 1 to 3 business days after successful verification

Loan uses

Credit card refinancing, debt consolidation, home improvement, and other purposes

Read full review

3.93.9

Credible rating

Fixed (APR)

9.95% - 35.99%

Loan Amounts

$2000 to $35000

Min. Credit Score

550

Check Rates

on Credible’s website

View Details

Overview

Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.

Loan amount

$2,000 to $35,000**

Fees

Origination fee, late fee, dishonored payment fee

Discounts

None

Eligibility

Available in all states except HI, IA, MA, ME, NY, VT, and WV

Min. income

$1,200 monthly

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)

Loan uses

Debt consolidation, emergency expense, life event, home improvement, and other purposes

Repayment terms

1 to 5 years (2 to 5 years through Credible)

Read full review

4.34.3

Credible rating

Fixed (APR)

-

Loan Amounts

$5000 to $35000

Min. Credit Score

700

Check Rates

on Credible’s website

View Details

Overview

It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 700). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.


Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.

Loan amount

$5,000 - $100,000 (up to $35,000 on Credible)

Fees

Origination fee

Discounts

None

Eligibility

Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000

Min. income

$25,000

Customer service

Live chat

Soft credit check

Yes

Time to get funds

Same day available, typically 1-3 days

Loan uses

Debt consolidation, home improvement, medical expenses, major purchases

Read full review

4.34.3

Credible rating

Fixed (APR)

11.69% - 35.99%

Loan Amounts

$1000 to $50000

Min. Credit Score

560

Check Rates

on Credible’s website

View Details

Overview

Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.

Note that rates and fees can be relatively high you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.

Loan amount

$1,000 - $50,000

Repayment terms

3, 5, or 7 years

Fees

Origination fee

Discounts

Autopay and direct pay

Eligibility

A U.S. citizen or permanent resident; not available in DC, IA, SC, WV

Min. income

None

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

As soon as 1 business day after acceptance

Loan uses

Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases

Read full review

3.93.9

Credible rating

Fixed (APR)

11.72% - 17.99%

Loan Amounts

$3000 to $40000

Min. Credit Score

640

Check Rates

on Credible’s website

View Details

Overview

Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.

You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.

Loan amount

$5,000 to $40,000

Fees

Origination fee

Discounts

None

Eligibility

Available in all states except MA, MS, NV, and OH

Min. income

None

Customer service

Phone, email, chat

Soft credit check

Yes

Time to get funds

As soon as 2 - 5 business days after verification

Loan uses

Debt consolidation and credit card consolidation only

Read full review

44

Credible rating

Fixed (APR)

-

Loan Amounts

$20000 to $200000

Min. Credit Score

660

Check Rates

on Credible’s website

View Details

Overview

BHG Money stands out for offering the largest loan amounts up to $200,000 of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.

Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.

Loan amount

$20,000 - $200,000

Repayment terms

3 - 10 years

Fees

Origination fees, late fees

Discounts

None

Eligibility

Available in all states except Maryland and Illinois

Min. income

$100,000

Customer service

Email, phone

Soft credit check

Not on lender's site

Time to get funds

In as few as 5 days

Loan uses

Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other

Read full review

3.73.7

Credible rating

Fixed (APR)

14.30% - 35.99%

Loan Amounts

$3500 to $40000

Min. Credit Score

640

Check Rates

on Credible’s website

View Details

Loan amount

$3,500 to $40,000

Fees

Origination Fee, $15 Late Fee, $25 NSF Fee

Discounts

None

Eligibility

Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories

Min. income

$1,000 monthly

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

Funds typically deposited into your account in 1 business day13

Loan uses

Debt consolidation, credit card refinancing

Read full review

3.93.9

Credible rating

Fixed (APR)

18.00% - 35.99%

Loan Amounts

$1500 to $20000

Min. Credit Score

540

Check Rates

on Credible’s website

View Details

Overview

OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.

Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.

Loan amount

$1,500 to $20,000

Fees

Origination fee, unsuccessful payment fee, late fee

Discounts

None

Eligibility

Must have photo I.D. issued by U.S. federal, state or local government

Min. income

Does not disclose

Customer service

Phone, email

Soft credit check

Yes

Time to get funds

As soon as 1 to 2 days after acceptance

Loan use

All except business, and education

Read full review

All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | SoFi Disclosures | Read more about Rates and Terms

2. Cash advance via an app

In recent years, various cash advance apps have cropped up that let you borrow against your next paycheck. For example, the Dave app offers cash advances of up to $500 to approved users.

Upon approval, you can transfer the advance amount to your bank account for free, or expedite the transfer for a fee. The fees range from $1.99 up to $13.99, depending on the amount you transfer and where you send it. At the time of publication, a $500 instant transfer to a bank debit card through Dave costs $13.99. For a one-week loan, the APR would be 145%.

Cash advance apps can be quick, convenient, affordable, and even free. But the fees, terms, loan amounts, and eligibility requirements vary by provider. Further, the fees can be much higher than equivalent personal loans, from an APR perspective.

3. Cash advance via credit card

Most credit cards allow you to withdraw up to a certain percentage of your credit line in cash through an ATM or bank. The upfront fees are commonly around 2% to 5% of the advance amount. So, a $500 cash advance could cost you $10 to $25 plus interest.

Importantly, cash advances often come with higher APRs that apply immediately and until you pay the amount off in full. For example, if your APR is 30% and you advance $500 plus the $25 fee, you’d pay about $13.10 per month in interest to carry that balance.

Credit card cash advances can be convenient if you already have a credit card with an available balance. That said, the combination of the fee, the ongoing interest charges, and the lack of a payoff date can make them relatively expensive.

Best Credit Cards

4. Payday alternative loans

Payday alternative loans (PALs) are small, affordable loans offered by federal credit unions. They were designed by the National Credit Union Administration (NCUA) to create an affordable alternative to payday loans.

PALs range from $200 to $1,000 and come with terms of one to six months. Further, the issuing credit unions can only charge fees to cover the actual costs of processing the loan applications, and APRs are capped at 28%.

Some credit unions may require that you're a member for at least a month, but then, you could qualify for up to three PALs during a six-month period.

5. Payday loan

A payday loan refers to a small, short-term loan that you repay from your next paycheck — often within two to four weeks. You can find lenders that offer them online, through brick-and-mortar locations, or both. They typically require you to provide a post-dated check in person or authorize a direct debit repayment from your bank account online.

The typical two-week payday loan comes with a fee of $15 per $100, which is equivalent to an APR of nearly 400%. These loans have been deemed predatory in the past, resulting in many states regulating their maximum loan amounts, loan terms, and finance charges. A handful of states have even prohibited them completely.

Being one of the most expensive ways to borrow, payday loans should be treated as a last resort. However, if you have bad credit, they can be easier to get than other loan types. Approval is often more heavily based on your income than credit, although your credit may be considered.

Where to get a $500 loan

You can find $500 loans from a variety of providers, including:

  • Personal loan lenders: A wide variety of personal loan lenders exist, but few offer loans under $1,000. Check out Personify, Oportun, and First Tech for $500 personal loans.
  • Payday loan lenders: You can find a variety of reputable payday loan lenders by researching and consulting legitimate reviews on sites like Trustpilot or the Better Business Bureau.
  • Cash advance apps: Popular apps offering cash advances up to $500 include EarnIn, Dave, and MoneyLion.
  • Credit card providers: Most credit cards allow for cash advances. Shop around and compare rates.
  • Federal credit unions: Federal credit unions that belong to the NCUA may offer PALs. Find one near you.

How to qualify for a small personal loan

Common eligibility criteria for obtaining a $500 personal loan include:

  • Credit score: You may need to meet minimum credit score requirements. Applicants with FICO scores below 670 (generally the benchmark for good credit) may not qualify, although some lenders cater to borrowers with fair to bad credit.
  • Credit report: Lenders often check your credit reports to review your payment history, outstanding debts, and other records. Derogatory marks or high credit utilization rates can result in denials.
  • Income: Lenders will check your income amounts, income sources, and payment frequency.
  • Employment status: Many lenders require you to be actively employed and will ask about your employment history.
  • Valid government ID: You must have a valid identification document from the U.S. government.
  • Active bank account: You must have an open and active bank account where the funds can be deposited.

Compare Personal Loans

Time to fund a $500 loan

Here are the funding times you can expect from various providers:

  • Personal loan lenders: Many personal loan lenders make approval decisions within minutes and deposit the funds as soon as the next business day.
  • Payday loan lenders: Online loans are typically funded the next business day, while in-store loans are funded the same day.
  • Cash advance apps: Standard bank transfers can take 2 to 5 business days, while express transfers can be completed in seconds or minutes.
  • Credit card providers: Once approved, it can take 5 to 7 business days to receive a credit card in the mail. But cash advances are available same-day once you have a credit card.
  • Federal credit unions: Credit unions will vary. Check the details with your credit union of choice.

How much will a $500 personal loan cost?

The cost of a $500 personal loan depends on the following factors:

  • Interest rates: Lenders will assign you an interest rate, which determines the percentage of the loan amount that you’ll pay per year in interest.
  • Fees: You may also be charged fees for the application, the loan origination, late payments, and more.
  • Loan term: The term will determine the amount of interest you have to pay. The longer your repayment period, the more expensive the loan.

For example: Let’s say you take out a $500 loan with a 25% APR and a 10-month term. Your monthly payment would be about $55.91. By the time you pay off the loan, you’ll have repaid the $500 plus about $59 in interest. However, if you were to pay off the loan after just one month, your total interest cost would be just $10.41.

On the other hand, if you were to borrow $500 via a payday loan, you could be charged $75 ($15 per $100). The $575 would then be due within two to four weeks. If you couldn’t repay the full amount on time, payday loan lenders often charge additional fees to extend your payment terms.

When compared over the same loan term of four weeks, the personal loan is significantly cheaper than the payday loan. However, personal loans also give you the option to split up the cost over a longer repayment term. Longer terms make the payments more affordable, but often result in higher overall costs.

See Also: What Credit Score Do I Need to Take Out a Personal Loan?

Alternative options to get $500 fast

Not sure you want to take out a $500 loan? There are other ways to come up with money quickly. For example, you can ask a family member or friend if you can borrow $500. They may lend it to you interest-free and be more flexible with the repayment terms.

Another option is to go through your belongings and see if there’s anything of value you no longer need. You can then sell it via Facebook Marketplace, Craigslist, or a garage sale. You can also look into federal financial assistance programs. If you qualify, the government can help you pay for food, housing, utility bills, and more.

FAQ

How do I choose the best lender for a $500 loan?

To find the best lender for a $500 loan, shop around and apply to see if you prequalify for loans. Upon prequalification, lenders provide you with loan amounts, APRs, fees, and loan terms. Then, you can compare the offers side by side to see which is the best fit for your situation. Prequalification is not an offer of credit, and the final rate you may be offered could be different depending on your credit profile.

Can a $500 loan impact my credit score?

Yes, a $500 loan can impact your credit score. If a lender requires a hard inquiry during the application process, that’ll dock a few points from your credit score. Further, if the lender reports the loan to the consumer credit bureaus, it can impact your credit mix, average account length, and payment history, which are all credit score factors.

Are there any restrictions on how I can use the funds from a $500 loan?

In most cases, lenders aren’t too concerned with how you use the loan funds. There are common restrictions on certain uses, however, such as paying off student loans, gambling, or illegal activities.

Can I get a $500 loan with bad credit or no credit history?

You may be able to get a $500 loan with bad or no credit. If you already have a credit card, you can get a cash advance without any additional credit check. In some cases, cash advance apps don’t require a credit check. Further, payday lenders and some personal loan lenders approve loans despite bad credit.

Learn about the specific type of $500 loan you need:

  • Auto Repair Loans
  • Deck Financing
  • Dental Financing
  • Engagement Ring Financing
  • Funeral Loans
  • Furniture Loans
  • Gym Equipment Financing
  • Home Improvement Loans
  • HVAC Financing
  • IVF Loans
  • Kitchen Remodel Loans
  • Landscaping Financing
  • Loans for Rent
  • Loans for Students
  • Moving Loans
  • RV Loans
  • Vacation Loans
  • Unemployment Loan

Meet the expert:

Jessica Walrack

Jessica Walrack is a freelance finance writer and journalist with over a decade of experience. During that time, she’s written hundreds of articles about loans, insurance, banking, mortgages, credit cards, budgeting, and taxes for well-known publications including CBS News MoneyWatch, USA Today, US News and World, Investopedia, and The Balance Money.

5 Loan Types and What To Know (2024)

FAQs

5 Loan Types and What To Know? ›

The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs—character, capacity, capital, collateral, and conditions—to set your loan rates and loan terms.

What are the 5 C's of lending? ›

The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs—character, capacity, capital, collateral, and conditions—to set your loan rates and loan terms.

What are the five types of loan granted by the bank? ›

What Are the 5 Most Common Loan Types? As a loan officer, five of the most common loan types you'll handle are as follows: mortgages, seed or working capital for small businesses, automotive loans, school loans, and personal loans.

What are 5 pieces of information you need to apply for a loan? ›

Lenders are required to provide you with a Loan Estimate once you have provided:
  • your name,
  • your income,
  • your Social Security number (so the lender can pull a credit report),
  • the property address,
  • an estimate of the value of the property, and.
  • the desired loan amount.
Apr 3, 2024

What are the five major types of mortgages and what factors set each apart from the other? ›

  • Conventional loan. Conventional loans, the most popular type of mortgage, come in two flavors: conforming and non-conforming. ...
  • Jumbo loan. Jumbo mortgages are home loans in an amount that surpasses FHFA's conforming loan limits. ...
  • Government-backed loan. ...
  • Fixed-rate mortgage. ...
  • Adjustable-rate mortgage (ARM)
Feb 9, 2024

Which of the 5 Cs refers to how the loan will be repaid? ›

Capacity refers to your ability to repay loans. Lenders can check your capacity by looking at how much debt you have and comparing it to how much income you earn. This is known as your debt-to-income (DTI) ratio.

What are the six basic Cs of lending? ›

The 6 'C's — character, capacity, capital, collateral, conditions and credit score — are widely regarded as the most effective strategy currently available for assisting lenders in determining which financing opportunity offers the most potential benefits.

How many main types of loans are there? ›

What are the different types of loans?
Loan typePurposeLoan length
Auto loanTo finance a vehicle12 to 84 months
Small business loanTo fund your business expensesUp to 300 months
Credit builder loanTo improve your credit score if you have no or low credit24 months
Payday loanCan be used for small purchasesTwo to four weeks
5 more rows

Which type of loan is best? ›

Salaried individuals can choose from personal loans, home loans, car loans, education loans, and credit card loans based on their income and financial goals. However, the best loan type may vary based on individual needs, such as home loans for purchasing property.

What are the five 5 important questions regarding loan requests? ›

Five Questions to Answer before Approaching a Bank for a Commercial Loan
  • What is the purpose of this loan request?
  • What dollar amount do you need for your loan request?
  • What length of term do you need to repay the loan in monthly installments?
  • What entity will the name of the loan be under? (
Jul 24, 2019

What are the 5 steps to prepare for the loan process? ›

By understanding the process, you will feel more at ease during the transaction.
  1. Step 1: Gathering and Submitting Application & Required Documentations. ...
  2. Step 2: Loan Underwriting. ...
  3. Step 3: Decision & Pre-Closing. ...
  4. Step 4: Closing. ...
  5. Step 5: Post Closing.
7 days ago

What is the easiest loan to get approved for? ›

The easiest types of loans to get approved for don't require a credit check and include payday loans, car title loans and pawnshop loans — but they're also highly predatory due to outrageously high interest rates and fees.

What is the most common mortgage type? ›

Conventional mortgages are the most common type of mortgage. That said, conventional loans may have different requirements for a borrower's minimum credit score and debt-to-income (DTI) ratio than other loan options.

What is an FHA home loan? ›

A Federal Housing Administration (FHA) loan is a home mortgage that is insured by the government and issued by a bank or other lender that is approved by the agency. FHA loans require a lower minimum down payment than many conventional loans, and applicants may have lower credit scores than is usually required. 1.

What are the 5Cs when it comes to farm lending? ›

The five Cs of credit is a common technique lenders use to evaluate your farm loan application and include character, capital, capacity, collateral, and conditions.

Which of the 5 Cs of credit requires that a person be trustworthy? ›

1. Character. A lender will look at a mortgage applicant's overall trustworthiness, personality and credibility to determine the borrower's character. The purpose of this is to determine whether the applicant is responsible and likely to make on-time payments on loans and other debts.

Which of the 5 Cs of credit help determine the ability to repay a loan based upon incoming and outgoing cash flow? ›

Capacity. Also known as cash flow, capacity determines a borrower's ability to repay debt. In essence, capacity focuses on whether the investment can generate enough cash flow to repay overall debt. Capacity can sometimes be called the Primary Source of Repayment.

What is the key element of the 5C's? ›

5C Analysis is a marketing framework to analyze the environment in which a company operates. It can provide insight into the key drivers of success, as well as the risk exposure to various environmental factors. The 5Cs are Company, Collaborators, Customers, Competitors, and Context.

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Msgr. Benton Quitzon

Last Updated:

Views: 5951

Rating: 4.2 / 5 (43 voted)

Reviews: 90% of readers found this page helpful

Author information

Name: Msgr. Benton Quitzon

Birthday: 2001-08-13

Address: 96487 Kris Cliff, Teresiafurt, WI 95201

Phone: +9418513585781

Job: Senior Designer

Hobby: Calligraphy, Rowing, Vacation, Geocaching, Web surfing, Electronics, Electronics

Introduction: My name is Msgr. Benton Quitzon, I am a comfortable, charming, thankful, happy, adventurous, handsome, precious person who loves writing and wants to share my knowledge and understanding with you.