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.

Take control of your money, optimize your spending and grow your savings automatically

The most effective ways to borrow money depend on your timeline and credit health. For immediate, low-cost needs, borrowing from family or a 401(k) loan are often the best financial moves. For larger, long-term goals, a secured bank loan or a personal loan offers the most competitive rates. If you have a solid credit score, Peer-to-Peer (P2P) lending is a modern alternative, while credit card cash advances should only be used as a last resort due to high interest.

Why Do People Borrow Money?

Financial needs rarely follow a convenient schedule, often arising when liquid savings are stretched thin. Most individuals seek external funding to bridge the gap between immediate obligations and future income, whether for planned milestones or sudden emergencies. Common drivers include “good debt” investments, such as financing higher education or purchasing a home, which potentially increase net worth over time. 

Conversely, many borrow to cover essential living expenses during a job transition, consolidate high-interest credit card debt into a single manageable payment, or handle unforeseen medical bills and urgent home repairs. In a consumer-driven economy, the temptation to finance a lifestyle beyond one’s current means is ever-present; however, the most successful borrowers are those who distinguish between borrowing for long-term value and borrowing for fleeting gratification, ensuring that today’s “quick fix” doesn’t become tomorrow’s permanent financial burden.

#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 use specialized peer-to-payment apps or simple digital tracking tools to keep a clear record of the balance and schedule, which helps maintain transparency for both parties.

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 of April 2026, market data shows that the average personal loan rate is approximately 12.04%. For borrowers with excellent credit, rates can be as low as 6.20%, while those with lower scores might see rates climb toward 35.99%. Missing payments can negatively impact your credit score and may result in late fees or a “default” status that makes future borrowing much more expensive.

#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 of 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 and Prosper let you borrow money from people interested in lending to others as an investment. You will likely need a solid credit history to secure the most competitive rates. Currently, peer-to-peer (P2P) interest rates typically range from 6.95% to 35.99%, depending on your credit grade and the loan term. There are also origination fees that are tied to your credit rating, which usually vary between 1% and 8% of the total loan amount.

#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!

Major loans to steer clear of include:

• Payday loans: High-fee, short-term loans that often lead to “rollovers” where you pay more in fees than the original principal.
• Title loans: These require your car as collateral and often carry triple-digit interest rates, risking your only mode of transportation.
• No-credit-check installment loans: These target people with poor credit and hide massive APRs in the fine print.
• Advance fee loans: Any “lender” that asks you to pay money upfront before receiving the loan is almost certainly a scam.

Conclusion

Borrowing money is a significant financial commitment that requires a strategy, not just a signature. Before taking on debt, evaluate whether the expense is a “need” or a “want” and compare the total cost of borrowing — including interest and fees — across different lenders. By choosing the most transparent and lower-interest options, you protect your future self from the weight of unmanageable debt.

FAQ

Is it better to use a credit card or a personal loan?

If you can pay the balance within a month, a credit card is often better due to the grace period. For larger amounts that require months or years to repay, a personal loan usually offers a much lower interest rate.

Will checking my loan rate hurt my credit score?

Most modern lenders use a “soft pull” to show you potential rates, which does not affect your score. However, a formal application results in a “hard pull,” which may cause a temporary slight dip in your credit score.

What is the fastest way to get a loan?

Credit card cash advances and P2P loans are often the fastest, sometimes providing funds within 24–48 hours, though family loans are the most immediate if the relationship is strong.

Can I borrow money with a low credit score?

Yes, but it is more expensive. You may need to provide collateral for a secured loan or look into credit unions, which offer more flexible terms than big banks. Expect interest rates on the higher end, often reaching 30% APR or more.

What happens if I miss a payment?

Your credit score will likely drop, and you’ll face late fees. For secured debt, like an auto or home equity loan, the lender can seize the asset used as collateral. Contact your lender immediately if you’re struggling; many offer hardship programs to avoid default.

Featured image credit: www.shutterstock.com