Borrowing money can be quite a struggle depending on the details of someone’s financial situation. It can often take quite a bit of time, a credit check, and a signed agreement indebting the borrower for years.
However, there are a few options available that are much easier and will not take such intense commitment to repay.
That being said, sometimes the easiest path forward is not always the best one. The following ways to borrow money can range from relatively safe to risky and even to downright dangerous, but anyone in need of money will be taking a gamble in one way or another, and these borrowing options can get the much needed cash where it needs to go and quickly.
Family and Friends
No one likes asking for help, and it can be especially hard to ask it from those you love the most.
However, when it comes to money, this can be the easiest way to get a much needed loan and often with the least amount of consequences. No credit check would be needed and fees such as interest will be way more flexible than a standard loan from another source.
It would be in the interest of both parties to get whatever is agreed upon in writing just to ease any kind of potential issues that arise, but any and all terms and conditions are customizable.
The largest risk of this loan is that failing to repay could significantly damage a precious relationship in the life of the borrower.
Employer Paycheck Advance
This option will depend solely on the rules and regulations set by the employer, but many workplaces offer this service to help their employees in times of financial distress. Most often, the amount of the loan will just be deducted from the next paycheck, and everything returns to normal. Some will charge a fee for this service, cap the percentage at a specific amount or limit the frequency of this request and all that is if they even offer the service in the first place.
Credit Card Cash Advance
Anyone in need of money who has a credit card could just use the card and pay the amount back as usual, but if cash is what’s needed instead of credit, then using the credit card for a cash advance is always an option, too.
A large majority of credit cards will let their user instantly withdraw cash from an ATM or bank if they have the credit available on their account.
Now, this option does come with a couple of things to keep in mind that are different than using the credit card normally. When a credit card is used for cash there is usually a transaction fee which can either be a flat rate of a specific amount of money, or a percentage of the money being withdrawn. Also, the interest rate that will be charged will be at least a few percentage points higher than the interest rate assigned to the account. In addition to these points, the interest rate will start accumulating immediately instead of having the standard grace period of 21 days minimum that a credit card purchase is traditionally given.
Peer to Peer Lending
This type of loan is a little bit newer compared to the rest of this list but it is growing pretty rapidly in popularity and has emerged as a fairly reasonable option for a loan. Peer to peer lending, also known as marketplace lending, is found online by going to a website that specializes in matching borrowers with potential lenders or investors.
Instead of going to a financial institution that generally has very clear cut black and white policies about loans, this option matches an individual in need of a loan with one or more potential investors. Whether the loan application is accepted or denied will be up to the investor based on their own personal thoughts of risk, which naturally will vary widely from person to person. The details of the loan will be written up and agreed to and will vary depending on the loan and the individuals involved.
Typically there will be a fee charged by the platform providing the service but it will be pretty negligible and nothing big enough to make this option less appealing.
This part of the list is where the risk will start to be pretty high compared to the previous options. The next few options should only be considered as last resorts and after all other reasonable options have been exhausted. As risky and potentially dangerous as they may be, they can still get someone the money they need if the times are desperate enough.
Payday loans are not legally authorized in all 50 states so this option may be unavailable to people residing in those states. Along with that, most states have wildly different laws and regulations on them, so before taking on this loan, it is important to know your state’s specific rules.
Payday loans are usually granted without a credit check and are short term in nature, lasting only a week or two before repayment is due. The interest rate and fees are the part that makes this option such a risk, as the APR (Annual Percentage Rate) can easily enter triple digit percentages. For comparison, the average APR for a personal loan from a bank or credit union is around 10% and credit cards just under 20%.
This option also comes with a prerequisite that the borrower gives the lender their banking account information so if the loan is not repaid on time, they can withdraw the funds themselves whether or not the borrower has the money available.
Although these loans are fairly common, there are many people that find themselves in dire straits financially after taking on a payday loan so beware the potential consequences. You don’t want to end up having to search for a way how to stop payday loans from taking automatic payments from your account.
Auto Title Loan
Similar to a payday loan is the auto title loan. This loan will produce much more money than a payday loan will but is also a risky venture.
Anyone that owns their car has a title of ownership for it. This loan will be about 25% to 50% of the value of the car and will last about 3 to 6 weeks. Interest rates and fees can also be astronomically high, and just like payday loans, the consequences can be devastating. In the event that the loan is not repaid on time the title to the car can legally be granted to the lender and the car in question can be repossessed to their possession.
These loans are often given without credit checks as the car is collateral, so either the lender gets their money back plus the large amounts of interest and fees, or they get the car itself. These loans can get someone a lot of money in a hurry but the potential ramifications for failing to repay can end up putting the borrower in a much worse spot financially.
Pawn Shop Loan
Pawn shops loans work as a kind of hybrid of a payday loan and auto title loan. A person will bring an item into the pawn shop and essentially sell it to the shop at a percentage of its value, normally around 25% to 50%. The seller and the pawn shop will set the details of the loan including interest and fees and a most importantly a date to repay.
Unlike an auto title loan, the item stays with the pawn shop and if the loan is not repaid, it will stay with the pawn shop permanently and they will legally have the option to sell the item to the public in order to make their money back.
Some people have no interest in buying back their item and the pawn shop is very happy to have collected a valuable item at less than half its cost. Depending on how important the item is to the person, pawning can be risky because if they want to buy back the item later, it could be much more expensive once the shop puts a price on it.
The Takeaway: There are plenty of ways to borrow money easily but sometimes easy means dangerous. Taking time to research the best option can go a long way to saving money and stress in the future.
Easy things in life are rarely worth their trouble, as the easier they are to get into, the harder they seem to get out of. Researching good quality loans and other options should be the first thing anyone in need of money does, as the consequences for jumping into something quick and easy can be quite a hassle to escape.