There is nothing wrong with borrowing money. Everyone out there uses it when in need. You may feel short on cash or facing some emergency situation. There can be countless reasons where you need to borrow money quickly and easily. There are many different options where you can borrow money quickly and each has its own advantages and disadvantages.
You must be aware of ins and outs of all the options so that you can make the right decision when you are in quick need of money. Some of the borrowing ways have instant benefits with easy qualification standards but high-interest rates. On the other hand, some methods have are more convenient and flexible but are difficult to qualify. Some of the ways to borrow money and their associated risks are listed below.
Credit Card Lending
One of the quickest and easiest methods to borrow money is credit card lending. There is a difference between receiving cash advances and buying goods and services. You can have access to immediate funds with the cash advance from a credit card. Credit card cash advances are associated with high-interest. Thus, you must look at the conditions and terms of the agreement to have an idea about interest charges before borrowing money.
Risks: The credit card lending not only have high-interest rates n advances as compared to interest on charges but also sometimes credit card issues charge cash advance fees (in the form of a percentage or flat rates). Another risk is that the interest rates start growing and accumulating immediately.
Online Fast Money Lenders
Online money lending is the fastest way to borrow money. Sometimes it is too quick that you can see the money in your account on very next business day. Although it is convenient, easy and faster yet you have been cautious about it before taking money online. Another advantage is that you don’t have any need to do efforts or going to a bank or other loan institution.
You just have to put information online and wait for its approval. It is the best option when you are short of money and have a poor credit score as there are many lenders who don’t work with bad or no credit. If you want an immediate loan and borrow money easily, get it from A1 Credit they offer lower interest rates and fixed terms and it is easy to avail.
Risks: Some of these online lenders banks may charge high-interest. Sometimes the terms and conditions are vague in online loans.
Bank lending includes different types of loans. It includes car loans, home loans, boat loans, home equity loans, and traditional signature loan. A signature loan is some sort of a personal loan from banking institution without any requirement of collateral. The money borrowed from a bank is usually used for repair of homes, family vacation or consolidating debt.
It involves the interest and you have to pay a fixed number of payments to the bank for a specified period of time. The payment criteria and interest rate depend on your credit score and collateral if any used as a guarantee to loan.
Risks: The bank lending is not flexible to give you any exceptions and you have to follow strict rules about borrower profiles and credit scores. When you have poor credit, you won’t be able to get a personal loan.
Payday loans also called emergency loans are short term loans and can be availed in an emergency situation. There are many other names of payday loans including check advance, post-dated check, and deferred deposit check loans or cash advance. Mostly these loans are offered for a short time period, generally from two to four weeks.
You will be required to show photo identification and provide proof of earning in the form of previous pay stubs. People mostly go for payday loans for covering expenses between paychecks and payback when getting next wages. Payday loans are associated with very high interest. Please make sure t read all the instruction and terms of agreements.
Risks: Payday loans have very high-interest. Majority of people stuck in this high interest and high fee payday loan ending up taking another loan. The fees are too high that it leads to bankruptcy. Better look for other options first.
Also Read: 8 Simple and Easy Tips to Save Money
Peer to Peer Lending
It is the traditional and oldest method of borrowing money. It involves the borrowing of money from friends or family members on a temporary basis. The biggest advantage of this method is that there may not be any interest charges involved.
There is another type of peer to peer money borrowing known as social borrowing which involves lending from the internet. The loans come from different people who are not essentially your friends or family members. A good example of peer to peer lending is the Prosper Marketplace.
Risks: If you fail to pay back the amount or disagree about the terms, it could affect the friendship or family relationship. It wouldn’t affect your credit score.
Home Equity Loan
The home equity is the loan against the equity in your home. A home equity line of credit (HELOC) or cash out refinance is a good way to get cash. The home equity loans have lower interest rates as compared to credit cards or personal loan as they are secured by your home.
Risk: If you fail to pay, you will lose your home to foreclosure. HELOCs normally have variable interest rates that can be modified, and all home loans may come with fees.
Keeping in view the advantages and disadvantages of some of the methods of borrowing money outlines above, you can better decide the right option for you depending on your needs.