Where are the best places to borrow money in the blink of an eye?
I have some money saved in my emergency fund, but I’m afraid it’s not enough for something like losing my job or my car fucking on me. Where can I find quick cash that isn’t shady?
Trying to stay afloat
We hear you. Life is full of surprises, and it’s not easy for everyone to save money. There are a ton of options, online and maybe everywhere, for getting a loan fast, but not all of them are smart choices, so it’s okay for you to try and find the best options before a financial crisis. . Here is where you can borrow money quickly, by descending order of risk and how fast you need the money. As a comparison, for most loan options, we’ll use a $ 5,000 loan that you pay back in 3 years; you can connect your own numbers to Mlcalc.com.
Least risky loan: family and friends
Borrowing from family or friends can be difficult, but it is the safest type of debt, at least financially. If you want to make sure you all feel more comfortable with your loan, set repayment terms and set an interest rate that everyone can agree on. Previously noted sites I owe you and Billmonk can help you track your personal loan.
If you need cash this second
All other options for getting money at once have higher interest rates, so you’ll pay more in the long run. However, if you can pay the money back quickly – for example, with your next paycheck – you won’t be wasting too much money on interest, but there may be fees and if you can’t pay them back quickly, the interests can snowball. and put yourself even deeper in the hole.
Personal bank loan: Banks and credit unions offer unsecured personal loans (that is, one that is not backed by something like your home), but you will need to credit rating to qualify for any of these loans. Bankrate can help compare personal loan rates in your region. For example, HSBC’s personal loan ranges from 13.85% to 19.25%.
- Cost: With an interest rate of 15%, you will pay $ 1,239.76 in interest on top of the principal. Monthly payments including interest would be $ 173.33.
- The risk: Your interest rate may rise and your credit rating may drop if you miss payments.
Credit card: Most credit cards offer cash advances in the form of checks or ATM access. Interest begins as soon as you withdraw the money and charges are between 2-4%. Interest rates can reach 25%.
- Cost: Assuming an interest rate of 18%, you will pay $ 1,507.43 in interest charges in addition to the principal, with a monthly principal and interest payment of $ 180.76.
- The risk: As with a bank loan, your interest rate can go up and your credit rating go down if you miss payments, and you will also be hit with late payment penalties.
BillFloat: BillFloat is a service that pays your bills for you if you can’t pay on time. He works with companies like State Farm and AT&T and you only need a bank account to get the loan. The repayment takes place 30 days later from your bank account automatically, and the interest is 3% per month (36% APR) plus a fee of $ 14.99 ($ ââ19.99 if you’re in a rush).
- Cost: For a $ 200 bill, you’ll pay $ 6 interest for 30 days, plus a $ 14.99 fee for a total of $ 220.99.
- The Risk: Late fees of $ 10 will be charged each month and the very high interest can cost you dearly, in addition to putting your credit rating on the line.
Longer term loans
Long-term loans like a home equity line of credit that you pay off over several years have lower interest rates, so they won’t cost you as much to borrow a large amount of money. They take a bit longer to get, however, and there are always risks, especially with collateral-linked loans like your home.
401 (k) Loan: If you participate in your company’s 401 (k) plan, there is a good chance that you can borrow the money you put into it. Forbes writes that the 401 (k) loan may be your best option as it does not impact your credit rating, and the interest charged on the loan balance goes back to your account (which can make the loan virtually free or at least minimal).
- Cost: None or minimal.
- The risk: If you quit or lose your job before repaying, you only have 60 days to repay; otherwise, you will have to pay an early withdrawal penalty of 10% if you are under 59.5 years old. Plus, taking money out of your retirement plan will cost you dearly in lost growth. For example, withdrawing $ 5,000 from an 8% earning account would cost you $ 7,060 in lost growth, assuming you are 25 years old before retirement and pay off the loan in 3 years. (Calculated with Money Chimp’s compound interest calculator.)
Peer-to-peer loans: Lendingclub.com and Prosper.com allows you to get a personal loan from people interested in lending to others as an investment. You will need a great credit score to get a good interest rate starting at 5%; if you have a bad score, the rates can reach 35%. There are also fees of between 0.5% and 5% depending on your credit rating.
- Cost: Assuming an interest rate of 12% on this 3-year $ 5,000 loan, you’ll pay $ 978.58 in interest on top of the principal, with monthly payments of $ 166.07. Plus origination fees.
- The risk: Late payment and credit charges.
Guaranteed bank loanHome Equity Loans, Home Equity Lines of Credit (HELOCs), and loans secured against your car or other assets can have attractive interest rates of around 5%, depending on your credit score. The risk here is however the highest. Note that HELOCs have variable interest rates and they work a little differently than a loan in that you withdraw money when you need it.
- Cost: At an interest rate of 6%, you will pay an additional $ 475.95 in interest on this $ 5,000 loan over 3 years. Monthly payments would be $ 152.11. (However, your repayment terms would likely be longer than 3 years.)
- The Risk: You could lose your home or other property if you default, and with HELOC, your interest rate can go up.
Willing to avoid
Stay away from predatory loans like payday loans or those from pawn shops. It may seem like the fees aren’t that high, but when you look at the interest rates, they can go up to 800%!
Hope you don’t need to access any of these loan sources in a financial emergency, and you can increase your emergency fund for added peace of mind and security. photo by Omar Omar.
You can follow or contact Melanie Pinola, the author of this article, on Twitter.