7 Ways to Borrow Money

It seems like every day we are bombarded by people who want us to enjoy doing something today and pay for it tomorrow. Saving up for a rainy day can be difficult when the lure of excitement is around every corner. But eventually, you have to pay the piper. If you really do need some money today, there are smart ways to get it, and terrible ways to get it.
Here are 7 ways to borrow money.

#1
Borrow money from family

This can be the most awkward of the options, but it is also the safest kind of debt from a financial perspective. To feel more comfortable about the loan, draw up repayment terms like any other and stick to them. You can even use an app like billpin to track your personal loan if it makes you more comfortable.

Working with friends and family allows you to avoid the fees and interest associated with high interest loans. These are the best if you need a loan for days or weeks, but long term loans from family can have a heavy toll on your relationships, so it is best not to use this option if you are looking for something that will span months or years.

#2
Personal bank loan

If you need money and don’t have anything to put up in collateral, it still may be possible to get an unsecured personal loan from a bank or credit union. These will require that you have a decent credit score to qualify and will carry fees and a high interest rate that is only marginally lower than a credit card.
As an example, HSBC’s personal loans range from 13.85 to 19.25 percent. Also, if you miss payments, this can negatively impact your credit score and may result in ballooning interest rates.

#3
Cash advances on your credit card

One easy way to access this loan is through a cash advance on your credit card at the ATM. As usual, the convenience of this kind of loan has a cost. Not only will you pay a fee of 2–4 percent that is charged at the time you draw the cash, you will also begin paying interest immediately at typical rates of as high as 29 percent APR.

#4
Put off your bill payments

If you need money short-term, you can contact your credit card companies or other recurring payment companies and ask them if you can skip a payment. Many appreciate your contacting them in advance and will waive fees or even interest if you let them know and ask politely. This might even work with your mortgage company. Keep in mind that you will still be charged interest, but it won’t negatively affect your credit.

#5
401(k) Loan

If you have a 401(k) plan with your work you will likely be able to make a loan on the money that you have invested. This has the advantage on not showing up on your credit rating and interest charged on the loan goes back into your account. This can reduce the costs on your loan making it practically free. Just talk to your HR department to find out the procedures and costs.

#6
Peer-to-Peer Loans

Services like Lendingclub.com and Prosper.com let you borrow money from people interested in lending to strangers as others as an investment. You will likely need to have an excellent credit score to get a good interest rate (5 percent), but you can secure a loan with any credit rating if you are willing to pay the high rates.
There are also fees that are tied to your credit rating which vary between 0.5 and 5 percent.

#7
Secured Bank Loan

If you have a home, vehicle, or another asset that is paid off, you can get a loan from your bank that uses the asset as collateral. Home equity lines of credit (HELOC), and loans secured by your car are common practice for banks and offer low interest rates and allow you to borrow money as you need it rather than pulling the full amount out immediately.

Loans You Should Avoid

The worst options are predatory loans. Anything that says, “Payday Loan” is a huge red flag. Pawnshops are also a great place to buy electronics, but a terrible place to get a loan. The rates might seem low at first, but when you include charges, fees and interest you can easily pay as high as 800 percent!

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