The Best Ways to Borrow Money

how to borrow money

We are not always prepared for all the unexpected emergencies and expenses that come in our lives. Sometimes, we need to take out a loan in order to make ends meet and have sufficient funds for the rainy days.

However, not all loans are of the same type, and it’s essential to match the kind of loan that caters best to your needs. Some loans are easily acquired, while others boast low-interest rates. Other loans are flexible and will allow you to customize payment terms.

Need Money Fast?

The market is saturated with different kinds of loans, so we scoured it to give you the best borrowing money options for ease of acquisition, affordability, and flexibility. Read on to learn more!

Best Way to Borrow Money Fast

Oftentimes, the reason behind borrowing money is urgent and pressing. Because of this, it is essential to know your options if you are trying to take out a personal loan as fast as possible. Some money loans involve little to no application.

Generally, you will be able to have your loan within the day; for some, you can have the cash or check in just an hour.

Be careful, though, as this kind of loan usually involves a steep interest rate and is classified as risky. Remember to only take out what’s urgent and use it only for emergencies.

Cash Advances

Credit card companies offer cash advances and enable consumers to withdraw from any machine using their pin-enabled credit cards. No application is involved in this kind of short term loans; withdrawing the cash is easy and straightforward.

Pros of using cash advances:

  • Convenient because there are many ATMs where you can withdraw from
  • No application process is involved, so the payout is instant

Cons of using cash advances:

  • Capped at a few hundred dollars depending on the credit card company
  • Involves a lot of fees, including credit card cash advance fees, ATM or bank fees, and interest for the loaned amount

Personal Loans

A personal loan is offered by a bank or credit union. To be able to acquire, you will need to file an application, and the bank will have to take a quick look at your credit score to assess your ability to repay the loan, especially if you have an existing loan.

Pros of using personal loans:

  • More secured because the personal loan comes from banks
  • Annual percentage rates (APR) are usually lower than the other options that offer loans
  • No collateral is required

Cons of using personal loans:

  • Payout is not instant as it requires an application period
  • You will need to have a decent or good or excellent credit report in order to qualify

Payday Loans

Payday loan got their name because the amount you loaned will be due on the next payday. This means that this kind of loan is short-term as it only allows a maximum of 2 weeks for the loan to be repaid.

Pros of using payday loans:

  • The loaned amount can be acquired almost instantly, with a maximum of a few hours
  • No collateral is required
  • It can be acquired even if you have a bad credit rating

Cons of using payday loans:

  • Characterized by high APR, ranging from 400 to 700%
  • Short repayment option at 2 weeks
  • Based on how much you earn so, you will need to provide proof of income

Borrow Money Apps

paydaysay loans

Phone applications nowadays offer quick online loans too. You only need to install them on your gadgets, provide a few verification IDs, and you can request a personal loan from the app itself. Once approved, the money will then go into your bank account.

Pros of using borrowing money apps:

  • Convenient because the application can be made on the app itself through online lenders
  • Has lower APR compared to other borrowing options that offer fast loans
  • The approved loan will come into your connected bank account

Cons of using borrowing money apps:

  • Only involves a small amount of money, up to a few hundred dollars
  • The payout time is between 1 to 3 days

Installment Loans

Installment loans are money loans you take out almost instantly, and repayment will involve small amounts in a period of time, which is usually a year or two. Many opt for this loan because they are attracted to the “small” amount needed to repay it.

Pros of using installment loans:

  • Flexible repayment options for about a year or two
  • The payout time is almost instant and involves little to no application process

Cons of using installment loans:

  • Characterized by high APR at around 40% on average
  • Involves other fees when you fail to settle the minimum amount due for the month

Cheapest Borrowing Money Options

When you are in need to borrow money and have a bit of time to wait it out, you should consider these options that offer low to no interest rates. These options also involve a more personal approach, tapping into the people you know, and thus are not heavy on the application side.

It is crucial to understand that these options exist and that you can use them when available to save on fees. You won’t be trapped in the vicious cycle of loaning and paying interest.

If you would like to save on fees and you are not in a hurry to have your loan, please read on and explore the list that we have compiled for you:

Friend or Family Loans

Reaching out to family members or friends when you need some quick cash can be beneficial. This way, you can avoid a tedious application process when you reach out to someone you know. Since you have a personal relationship, it will be easier to discuss a loan agreement with the interest and repayment terms that you both agree on.

Pros of using a friend or family loans:

  • You can avoid a tedious application process
  • You can work out an interest rate and monthly repayments that will both work for you

Cons of using a friend or family loans:

  • It can create conflict among friends and family, so it’s best to have what you agreed on written down and notarized

Peer-to-Peer Lending

Peer-to-peer lending is an option that allows a borrower to directly loan out from other online lenders. This type of lending involves multiple lenders and it takes out the middleman such as banks or other financial institutions, resulting in lower monthly payments.

In order to qualify for peer-to-peer lending, you need to submit income proof and other documents that may prove your ability to repay.

Pros of peer-to-peer lending:

  • Involves lower interest rates and a flexible repayment scheme
  • No hidden charges and fees that are primarily present in financial institutions and banks

Cons of peer-to-peer lending:

  • Documents and other application forms should be filled up and submitted to qualify
  • Involves some type of risk as there are no financial institutions to mediate and facilitate

Paycheck Advance from Employer

If you are employed, chances are you can actually request a paycheck advance from your employer. The possibility of this option solely relies on your employer as there are no laws that give employees a right to this.

Suppose you have a good or friendly relationship with your boss. In that case, you can explain the emergency you are in and how a salary advance can meet these needs.

Pros of paycheck advance:

  • There will be no interest rate to be paid as you are just getting your salary in advance
  • You won’t need to repay your loan since it is your paycheck in advance

Cons of paycheck advance:

  • There is no assurance that this loan will be given to you.
  • You might need to sign a bond tying to the company for a few months or years to assure you are not going anywhere.

Other Loan Options to Borrow Money

Aside from the loan options that cater to urgent needs and those that involve low-interest rates, there are tons of other options you can opt-in if those discussed above do not necessarily suit your needs.

Most are flexible, and others will require you to put in as collateral the valuable items you own, such as jewelry, gadgets, or house title. If you have a retirement plan, you can also tap into it in advance if you have an urgent need for cash.

Please read the options below to choose the loan according to the amount, interest rate, urgency, and repayment flexibility. After all, it involves your hard-earned money, and you would not want it wasted.

Credit Unions

To apply for a personal loan under a credit union, you must first be a Federal credit union member. Once you already are, you can apply for a loan with an interest rate based on your credit check. The higher one’s credit score is, the lower or more favorable the rate is.

Pros of credit unions:

  • Includes lower rates than other loan options
  • Offers customized and flexible loan repayment scheme
  • If you have a good or excellent credit check, you will be given a low-monthly interest payments for your loan

Cons of credit unions:

  • Includes an application process that looks into your credit score and ability to repay the loan
  • Membership in the union is required
  • The loan cannot be taken out instantly and can take up to a few days

401k Loans

401k loan is taking out a loan from the vested account balance of your retirement account. The interest charges associated with this kind of loan are lower, and there are no penalties when you miss a payment.

Hence, it makes up for an attractive option. Your credit score is not affected in any way whether you repay on time, but note that the interest you will have to pay will be included directly in your retirement account.

Pros of 401k loan:

  • Low-interest rate and no hidden fees and charges
  • No penalties when you miss a payment
  • Interest paid go directly to your retirement account

Cons of 401k loan:

  • You miss some growth on the money that’s supposed to be kept until retirement

Home Equity Loans or HELOCs

Suppose a borrower has taken a mortgage for a home and the home’s value exceeds the outstanding loan balance. In that case, the borrower can loan a percentage of that difference called the Equity.

A Home Equity Loan typically offers relatively lower APRs than those offered by credit cards and personal loans from banks or credit bureaus. This is because you are putting in your home title as the collateral.

Pros of Home Equity Loan:

  • Lower interest rates than other loan options

Cons of Home Equity Loan:

  • Failure to pay the loan can result in losing your home
  • The loan is not instant and not quick as you need to have the value of your home assessed in the market

Pawnshop Loans

Pawnshops accept valuable items as collateral in exchange for some cash. When you are able to repay your loan with interest, you can claim back your valuable item. The items that pawnshops are usually accepting are the following: jewelry, gadgets, and antique items.

Pros of pawnshop loans:

  • The loan can be quick as you can leave the pawnshop with cash after they assess the value of your collateral
  • No application is required, and pawnshops will not look into your credit history

Cons of pawnshop loans:

  • The amount to be loaned is dependent on the assessed value of your item
  • Repayment duration is usually short such as 30 days
  • Interest fees are typically high

Retirement Loans

If you have already set up a retirement plan for yourself, you can tap into this if you require some cash in the present. Depending on the financial institution that handles your retirement fund, some allow this loan without interest and fees.

Pros of retirement loans:

  • Involves little to no interest rates
  • Application is easy and will not look into your bad credit score
  • Loan payments can be arranged in a flexible manner

Cons of retirement loans:

  • It May have complications when it comes to tax
  • Money that is supposed to be growing is taken out and is not earning

Public Agencies

Public agency loans are usually backed by the government and function by pooling investment amounts on mortgages. There are specific standards that the agencies should comply with for them to be supported by the government.

Because of this, borrowers and investors are assured of the money they are putting in and taking out.

Pros of public agencies:

  • Backed by the government
  • Competitive interest rates in comparison to other loan options

Cons of public agencies:

  • The application can be a lengthy and tedious process that can take up to several weeks
  • Some public agencies require membership before the loan can be taken out

Margin Accounts

Do you know you can take out a loan using your marginal accounts such as stocks, bonds, or mutual funds? This kind of loan is called a margin loan and depends on your assets’ daily values.

This means that when the value of your assets rises, the amount you can loan also rises. Consequently, when the value of your assets plunges, you may need to sell and liquidate your assets to cover your loan.

Pros of margin accounts:

  • Convenient because you don’t need to put in other collaterals except for your margin account
  • The loan is quick and will only take a few days at most

Cons of margin accounts:

  • The loss will be magnified, and you might need to liquidate assets to cover the loan
  • Extremely risky

Credit Cards

Using credit cards to handle your purchases and/or services is also considered a type of loan. For instance, almost all hospitals accept credit cards as a payment type, and you can just pay for the balance incurred in full or in installments.

The same can also be done in supermarkets or even in schools.

Pros of credit card loans:

  • Fast and easy application for the credit card
  • There usually is a cutoff for the payment, so you don’t need to have the cash ready right away

Cons of credit card loans:

  • Interest rates are higher than most options
  • Usually capped to a few thousand dollars depending on your credit score as well

Title Loans

Title loans are loans you can take against a title as collateral. This usually involves car titles or home titles. The borrower can go to a lending company and bring the title.

The lender will then give a percentage of the asset’s value and keep the title as collateral. When the loan is paid fully, you can recollect your title back.

Pros of title loans:

  • Doesn’t involve a lengthy application, and you can take out your loan in just a day
  • Doesn’t look at your credit history

Cons of title loans:

  • In case of non-repayment, you can lose the assets that you put in as a collateral
  • Involves high-interest rates, usually more than 100%

FAQs

  • How can I legally borrow money?
    Depending on your priority regarding urgency, affordability, and flexibility, there are many legal ways to borrow money. Some of the examples are cash advances, pawnshop loans, 401k loans, credit unions, and home equity loans.
  • Can you borrow money for anything?
    Yes. There are many loaning options where the traditional lenders or the online lenders don’t care about where you’re using the borrowed money as long as you adhere to their requirements. But remember that some of these loaning options have incredibly high APRs, so opt for those only on essential matters.
  • How can I borrow money fast?
    To borrow money fast, you can take out a loan from one of the following: payday loan, installment loan, and online lenders from borrow money applications. These options do not involve a lengthy application, and you can have your money within the day. For cash advance, it’s even quicker because you just withdraw from the ATM.
  • What is the smartest way to borrow money?
    The smartest way to borrow money is to take a loan from your 401k or other retirement loans. With these options, you pay interest that is low and sometimes even none. Borrowing from your 401k involves some disadvantages, too, but it has the least drawback, especially if you are dealing with emergencies.
  • How can I borrow money without a job?
    If you don’t have a job or proof of income, you can still borrow some money, but it shouldn’t have a tedious application process. You can opt for pawnshop loans, friends or family loans, margin account loans, or title loans. These loans have minimal requirements, so you won’t need to provide proof of income.
  • How can I instantly borrow money?
    There are several ways to borrow money instantly. The easiest will be to swipe your credit card if the service or purchase you need accepts one. You can also opt to make a cash advance from your credit card, go to the nearest ATM, and withdraw using your credit card; no application is required.
  • How can I borrow money without a loan?
    To borrow money without taking a loan, you can reach out to your family and friends and negotiate interest charges and monthly payments that satisfy both of you. If you are employed, you can also talk to your employer to see if you can have some salary advance.
  • What are the requirements to borrow a loan?
    The requirements to take out a loan differ from the type of loan you are taking. The most common is proof of income and some identification. Other lenders also require a co-maker they can reach out to if they cannot contact you. For loans involving collaterals, you will need to provide some title or your valuables itself.