Borrowing money may not be the best financing option, but sometimes, you can be faced with a great financial challenge and need to borrow money. When this happens, it is usually advisable to find out the best ways to borrow money.
Whether you are in dire need of funds or you want to get the best rate, carefully read through to find the best wats to borrow money, the risk and benefits involved.
Fastest Ways to Borrow Money
One of the factors to consider is that the easier or faster you borrow the money, the riskier it gets.
Personal Loans from Online Lenders
Personal loans from online lenders are the easiest and fastest way to borrow money, considering the convenience and application process of borrowing money online. Unlike the traditional lenders, banks and credit unions where you to come physically to complete the application process.
Online personal loan lenders typically give loan amounts ranging from $1,000 to $50,000, or more. You can check if you pre-qualify on a trusted online lender’s platform and compare loan rates to get the best annual percentage rate (APR). APR depends on factors like your credit score and the amount you earn.
If you have bad credit, it will be easier to get a loan from online lenders than from a bank. You can shop for online loan platforms that offer loans to people with a bad credit score.
Pro
- The application process and funding are strictly online.
- Same day or the next day account funding
- Available for bad and fair credit applicants.
Cons
- High annual percentage rate for borrowers with bad and fair credit
Loan Apps
If you need an instant small amount of money, then you can use loan cash apps to borrow the amount needed. Loan apps provide you with instant cash that you need, but you will likely pay an extra fee for expedited service. They usually have short repayment terms.
Pros
- Available options to receive cash instantly
- The service fee is optional
Cons
- Short repayment terms
- Borrowing amount Is usually small.
- You may be charged a service fee for small amounts.
Loans from Family and Friends
This is one of the best yet difficult options. However, borrowing from a family member or friend can be fast, safer, and affordable solution to your financial challenge. It is also a quicker means, because there will be no need to undergo the application process, credit checks, or approval process.
But you will need to be very careful while seeking to take a loan from a family member or friend. To make things easier, come to a mutual agreement on loan terms, which may include interest, repayment dates, and others. Ensure it is on paper or a written document signed by both parties.
Pros
- No application, credit checks or approval process.
- Low or no interest rate.
Cons
- Can lead to conflict between family members or friends.
Cash Advance from a Credit Card
You can also get a loan from your credit card. If you have access to get cash advance via your credit card. Using this, you may be able to get an amount of cash advance by visiting an ATM to withdraw if your credit card has a PIN.
Cash advance from your credit card is fast way to borrow monet, but it is very expensive because of the charge fee such as cash advance fees, ATM or ban fees, and a high interest rate than what you used on your credit card. And interest rates starts to accumulates immediately you receive your cash advance on your card.
Pros
- No application or approval process since you have your credit card already.
Cons
- High interest rates
- High charge fees like ATM or bank fees.
- Interest starts to accumulate immediately.
Pawnshop Loan
Pawnshop loan is similar to the traditional banks loan where ypu have to provide a collateral. You can bring in item like electronics, jewelries, etc. the pawnshop will look into the item, the worth, state of the item, and the resale options for profit, then make you an offer.
Once you accept the loan offer, you will receive a cash and a pawn ticket. After repaying your loan amount, you will collect your items back. But if you fail to repay your loan amount, by the deadline, the pawnshop automatically own your item.
A pawnshop doesn’t have a loan approval process, so you will receive yoru laon amount without any impact or checks on your credit score. However, the interest rate might be high. While some pawnshop may charge a fee for storage, and insurance which can lead to very high APR.
Pros
- No approval process involve.
- Instant access to loan amount.
Cons
- There is a short repayment terms with pawnshop.
- A possibility of the item getting lost
The Best Cheapest Ways to Borrow Money
We have looked into the best ways to borrow money, but some of the above listed ways are expensive. So we have compiled a list of the cheap ways that you can get money.
Personal Loan From a Bank or Credit Union
If you are a member of credit union or you have a bank account, then taking loans from the bank or credit union may be the best option for you. The banks and credit union offers the lowest APR for personal loans. They also offer flexible repayment options and APR discount for existing customers or union members.
Banks allow you pre-qualify to review the loan rates and term before you apply formally. If you have a bad credit score, it may be very difficult to get a loan from a bank. Credit unions on the other hand offer low rates to people with fair or bad credit score.
Pros
- Offer lower APR than other personal loan lenders
- Flexible repayment plans and APR for existing customers
- There are various types of personal loans option available.
Cons
- You must have a great credit score for many banks to be eligible.
- You must be a member of the credit union to apply.
0% APR Credit card
A 0% APR credit card is one of the best options to borrow money of you can pay of the balance on your credit score within the given card 0% APR period. If you have a 15 to 21 introductory 0% APR credit card, you can cover a large number of expenses when you pay off your balance within the introductory period, you will not need to pay any ineterst at all.
Pros
- No interest to pay when you make purchases during the introductory period.
- Your card may have special perks like cash back reward.
Con
- You need a good or excellent credit score
- You have a limited time to may repayment.
401k loans
401K loans give you access to borrow funds from your retirement fund, and you don’t have to pay penalties or taxes as long as you keep to your part of the repayment plan.
Plus, they offer some of the lowest interest rates, and there is no credit checks are required. Fortunately, the interest you accrue from the loan period is funded back to your retirement account. And if you miss a payment, there will be no impact on your credit score because 401k loans are not reported to credit bureaus.
Pros
- Low interest rates
- No impact on your credit score when you missed your repayments.
- Interest accrued goes back to your retirement account.
Cons
- Short repayment terms if you leave your job.
- Lowers your retirement pay and its ability to grow.
Home Equity Financing
If you own a home, you may qualify for a home equity loan or home equity line of credit (HELOC), which allows you to borrow money that is against your home’s value minus what you owe on the mortgage.
Home equity loans allow you get a single payment, with which you repay over a period of time. HELOC, allows you to withdraw and pay interest on the money you need. You can Access the money during the “draw” period, which is generally 10 years, and you can repay the money over a term of 20 years.
Pros
- Lower interest rates than unsecured loans or credit lines.
- Available loan repayment periods.
Cons
- You put your home a risk if you cannot repay the loan.
What to Consider When Borrowing Money
When borrowing, it is very wise to weigh the options available to you and also put into consideration the following things below
- Loan Purpose
How you plan to use the money matters. A zero-interest credit card might work for buying a fridge, but for a full kitchen remodel, a HELOC could be a better fit. - Loan Amounts: Lenders have different loan amounts (minimum and maximum). It is very important to factor in how much you want to borrow. If the Loan amount you need is nit substantial, you may decide to use a cash advance app.
- Personal Preferences
Do you need cash fast, or is a lower borrowing cost more important? Knowing your top priority will help you choose the right loan option. - Repayment Terms
- Different loans come with different timelines. Some, like pawnshop or loan apps, may need to be paid back within weeks. Personal loans usually offer 2–7 years to repay.
