Borrowing money can confusing and difficult, many ask where to borrow money from; here are some options.
Fastest Ways to Borrow Money
Borrowing money can be a difficult and timely endeavor. Even a simple personal loan from a bank a customer knows well can take days or weeks to execute. But there are faster ways to borrow money, they just tend to cost a lot more than traditional models.
One way to get money fast is to visit a payday lender. Payday loans can provide same business day cash, but if not paid back within a very short term (often two weeks or less) the interest rate can skyrocket from 30% to 300% APY more than 10x the highest credit card.
Online lenders may be able to help as well. Short-term loans with rates that rival or even exceed payday loan facilities can get borrowers money fast but operate outside of the already dubious world of payday loans.
Credit Card Cash Advance
Another fast and expensive way to borrow money is to utilize the cash advance feature of a credit card you may have. Cash Advance limits are typically lower than the credit limit for a card, for example, if your credit card offers a $5,000 limit, the cash advance limit may only be $1,200.
Cash Advance rates also vary from credit card purchase interest rates because they indicate potential financial problems and may be harder to recover from the client.
Cheapest Ways to Borrow Money
Contrary to the fast and expensive ways to borrow money, traditional personal loans, lines of credit, and mortgages offer shockingly low-interest rates. Personal loans from a credit union that often do not utilize collateral and may use an alternative means for approval can be approved with interest rates near zero and certainly in the single digits.
What is more important about these types of loans is the loan amount and the ability to repay the debt by making on-time monthly payments. Personal loans are often just a few thousand dollars but could climb higher depending on need, ability to repay, collateral, and credit history.
Mortgages are some of the cheapest ways to borrow money but must be associated with a home purchase. That said, mortgages can lump in other high-interest debt to reduce the overall liability.
Personal Line of Credit
Separate from a personal loan or a mortgage are lines of credit. A line of credit or a home equity line of credit (HELOC) utilizes the equity a homeowner has built and borrows against it at a very low-interest rate. This facility is often easy to turn on and off and offers very low rates since it is tied to an asset.
A personal borrowing facility separate from the attached asset of a home often relies on other assets the borrower has at the bank, such as a car loan with equity in the vehicle, CDs, or other financial instruments.
Best Way to Borrow Money
Those who have a good credit score should consider applying for a traditional loan. An installment loan offers long-duration payment periods, low-interest rates, and for those with the best credit history they are unsecured loans.
Those with bad credit can still apply for a loan but may not be approved or may need to provide collateral the bank can collect if the borrower fails to repay.
A student loan is also a good way to borrow money and refinancing existing student loans can allow borrowers to consolidate their high-interest debt when doing so.
Mortgages and auto loans also offer low interest rates and long terms though it will be hard to borrow much additional money in most auto loans.
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