Life happens. When it does, it usually costs money. And when it’s an emergency, you require money immediately. If you don’t have access to a rainy day fund, you need fast cash.
“At some point, we’ve all panicked about where to find some cash quickly. No one likes stressing about money (even while most of us do), but there is more than one way to borrow cash quickly.”G. Brian Davis, Director of Education, SparkRental.
There are several different ways to get quick funding. Read on to figure out the best way to borrow money for your financial situation.
A loan from family or friends
It might hurt your pride to ask friends and family for a loan, but in most cases, it’s a lot easier on your pocketbook. Even if your friend or family member wants to charge interest, it’s usually cheaper in the long run to borrow money from someone you know.
If you don’t pay the loan back as agreed, you can experience trouble in your relationship. Help prevent misunderstandings with friends and family by spelling out in an agreement how much money you’re borrowing and when and how you’ll pay the loan back.
- The least expensive form of borrowing.
- Quick access to money.
- Can cause resentments and hurt feelings.
- The borrower may feel less urgency to pay the loan back.
Credit card cash advance
Most credit cards offer a cash advance via a check or money at the ATM. While the process is simple, keep in mind that the interest rates tend to be high when borrowing money in this manner.
Fees for credit card advances range from 2 to 5 percent of the total amount borrowed, and interest begins accruing as soon as you withdraw the money. Interest rates tend to be high, going up to 25% or more. For example, a loan of $2,000 can cost you $80 in fees, not including interest.
Some credit card issuers have it arranged so that you don’t start paying the cash advance total until you pay off any balance for purchases. That means you may get stuck paying the extra high interest rate for a long time.
If you can’t pay off the credit card balance within the first billing cycle, avoid paying excessive interest charges by transferring the amount owed to a 0% APR balance transfer credit card. Such cards have promotional periods of up to 21 months, during which you don’t pay interest—only a fee when the balance is transferred.
- One of the quickest methods for borrowing money.
- You don’t need a high credit score or experience a credit check.
- Fees and interest rates are high.
- Variable interest rates are common and can cause the amount of interest owed to rise substantially.
- Fail to pay on time, and you risk a rise in interest rate and an expensive late fee.
Online personal loan
An increasing number of online lenders offer quick cash loans at reasonable interest rates. Your APR may be higher with an online personal loan than a credit union or bank loan, but not significantly. You’ll have access to the funds within minutes or hours rather than having to wait several days. Some lenders, such as OppLoans, NetCredit and Speedy Cash, will also consider borrower with bad credit. However, these lenders charge very high interest rates, so make sure you can afford the payments or you will just compound your financial difficulties.
There are two main types of personal loans that offer quick access to cash:
- Secured loan:
A secured loan gives you ready access to cash and works well for borrowers with less than ideal credit. To get a secured loan, you offer collateral against the loan, such as real estate or personal property. If you default on the loan, the borrower can take your property.
- Unsecured loan:
If you have a good credit score of 670+, you can get a loan without having to put anything up for collateral. These loans are also known as signature loans; you sign and agree to pay back the borrower. Interest rates tend to be higher for unsecured loans compared to secured loans.
- Speedy access to money.
- Quick and easy application.(Most online personal loan applications take just minutes to complete).
- Interest rates and fees can be high.
- If you get a secured loan and miss payments, you risk losing whatever you’ve put up for collateral.
Home equity line of credit (HELOC)
If you have equity in your home, a home equity line of credit (HELOC) may be your best option for quick cash. Your credit limit is based on the amount of equity in your home. You can withdraw money up to the amount of your credit line. Most HELOCs have variable interest rates, so consider this when deciding how much you can afford to borrow.
“HELOCs fund relatively quickly and have the advantage of being a rotating credit line that borrowers can draw on at their convenience and pay back on their own schedule,” Davis
- Low interest rates.
- Once the HELOC is set up, it’s quick and easy to withdraw funds.
- The credit line is secured by your house, which means if you don’t pay, you risk losing your home.
- Hidden fees are possible.
“One of the fastest and cheapest ways to borrow money is against your 401(k),” says Davis. “These loans often fund within days of the initial application.”
According to the IRS, the maximum amount that can be borrowed is 50% of the vested account balance, or $50,000. If the balance is less than $10,000, then the account owner can borrow up to that amount.
You must repay the money and restore the account, generally within 5 years, by making at least quarterly payments. There is an exception to the 5 years if you use the money to buy a primary residence.
The cost of borrowing from your retirement savings is minimal and definitely much lower than paying interest for a lender loan.
- Pay no tax or interest.
- Your credit isn’t checked.
- You only have 60 days to repay the loan if you leave or lose your job.
- You risk losing account growth while you repay the loan.
High-interest rate loans
Although it’s not ideal, if all other avenues fail, it’s possible to get what are typically very high interest loans, such as payday/cash advance and title loans. If you do decide to take out one of these loans, it’s advisable to do so only if you are expecting money in soon that will allow you to pay them off quickly. Otherwise, you risk getting into a vicious cycle of additional fees and interest payments.
Payday loans, which are sometimes called cash advance loans, allow you to borrow money against your paycheck at an interest rate that generally ranges from a 300% to 500% APR. If you don’t repay the loan in full by your next paycheck (typically 14 days), the lender rolls the loan over and refinances it, tacking on additional high fees and more interest.
A car title loan uses your car as collateral. This is a short-term, high-interest rate loan that lasts for 15 to 20 days and features an average 300% APR. The amount of money you can borrow is based on 25 to 50 percent of the value of your car. If you don’t pay the loan off in time, the lender rolls over the loan, tacking on more fees and interest, notes the Federal Trade Commission, which advises against such loans.
- An option if you have bad credit.
- Funding is generally instantaneous.
- Interest rates can be astronomical.
- Easy to fall into a cycle of never paying off the original loan.
- In the case of title loans, you risk losing your vehicle if you can’t pay.
While it’s understandable that you’re in a hurry when you need cash quick, it’s advisable to take a deep breath and consider your various options carefully. Shopping around and comparing lenders is your best bet for making the most cost effective choice for your financial situation.
It pays to know what are the different ways to borrow money quickly when you need funds in a pinch. Visit SuperMoney’s Personal Loan Reviews page for a list of lenders available to provide quick cash for life’s emergencies.