Needing to borrow some money is not something you should be ashamed of. Whether you are about to make a big purchase, you want to start a new business, or you are going through a difficult time and you’re not sure how you’re going to pay your groceries or your rent, don’t hesitate to ask for the financial help you need. There is no perfect way to borrow money, as it all depends on your situation, and on how much cash you need.
Take a look at these 7 different ways to borrow money, and see which one would be the most convenient for you:
1. Borrow money from your family or your friends
There are many different ways to borrow money. The easiest methods is to borrow money from your family and friends. If you only need a small amount of money, you might be able to borrow it from a family member or from a friend. The biggest advantage is that you won’t need to pay interests on the money you borrow.
However, you have to be careful if you don’t want to risk ruining any relationship. Before you ask someone if they could lend you some money, make sure they can afford to. And if they do lend you some money, make sure you repay them as soon as you can.
2. Get a payday loan
If you need money quickly, you could get it by applying for a payday loan. A payday loan is a short-term loan based on your income, which means that you will be able to borrow a portion of your next paycheck.
Payday loans are unsecured loans that usually come with high interest rates. If you make sure you will be able to repay the amount you borrowed as soon as you get your next paycheck, getting a payday loan is a convenient option that will allow you to get the funds you need very quickly.
3. Borrow money through a credit card
If you have trouble paying for essential items, you could also simply borrow money through a credit card. Using a credit card is great if you need something like a short-term loan, especially if you can get one with a very low interest rate.
But of course, the more purchases you make with your credit card, the more money you will have to repay if you don’t want to carry a credit card debt forever. Borrowing money through a credit card is a short-term solution, but it can be convenient if you stay careful not to overspend.
4. Get a personal loan from your bank
If you need a lot of money, you should try to get a personal loan from your bank. To be able to qualify for a loan, you should ideally have a good credit score.
There are two types of personal loans: secured, and unsecured. While an unsecured loan requires no collateral, a secured loan is leveraged against something that you own, like your home, your car, or some other asset. This means that if ever you can’t repay your loan according to your bank’s terms, you could lose your asset.
5. Get a loan from a credit union
If you can’t get a loan from your bank, you could try getting one from a credit union. Credit unions are financial cooperatives that are owned and operated by their members. Since they are not-for-profits organizations, they can offer loans with lower interest rates than other financial institutions.
However, to get a loan from a credit union, you have to become a member and to meet some requirements. If you are not already a member of a credit union, it could be more simple to borrow money from another source.
6. Consider getting a second mortgage
If you own a home, you could borrow a large sum of money by taking out a second mortgage on your house. This can be a good option because if you qualify, you will benefit from low interest rates.
Keep in mind that a second mortgage is a type of secured loan. If you can handle your monthly payments, you will have no problem. But if you can’t repay this loan, you could risk losing your home, so make sure you can afford to borrow money this way.
7. Apply for a business loan
If you need some funds to start a new business, the best thing you could do is apply for a business loan with your bank or your credit union. If you qualify, you will be able to receive the money you need to start your venture, and you will repay it when your business becomes profitable.
Of course, there are other ways to get the funds you need to start a business. You could turn to crowdfunding, apply for a business grant, or look for an angel investor who could be interested in financing your venture.