Quick Ways to Borrow Money
JB
Last updated 03/15/2024 by
Julie Bawden-DavisLife 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.
Get Competing Personal Loan Offers In Minutes
Compare rates from multiple vetted lenders. Discover your lowest eligible rate.
It's quick, free and won’t hurt your credit score
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.
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.
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 payback on their own schedule,” Davis
401(k) Loan
“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.
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 advices against such loans.
FAQ on Ways to Borrow Money
How can I borrow money quickly?
There are several different ways to get quick funding. Borrowing from family or friends, home equity line of credit (HELOC), credit card cash advances, short-term loans, personal loans.
Is it safe to apply for a loan online?
It’s safe to apply for a loan online with a reputable company. However, there are some illegitimate companies that operate online and prey on people looking to borrow money fast. You should check that the lender has a secure and legitimate website before submitting your application.
What does “Unsecured loan” mean?
An unsecured loan is a loan that is not backed by collateral (a mortgage is an example of a secured loan where the house acts as the collateral). Typically an unsecured loan is provided based on your ability to pay it back.
Personal loan or credit card: which is better?
If you need cash, a credit card or personal loan could be right for you. While a credit card is usually better for short-term debt, a personal loan is often ideal for people who need more time to repay. Then again, which option is best for you may boil down to how much interest you’ll pay, too.
Is it a good idea to get a personal loan?
Personal loans can be a good idea for consumers with excellent credit. But if you don’t have excellent credit, a personal loan might come with an interest rate so high that it’s more than some credit card rates.
The Bottom Line
While it’s understandable that you’re in a hurry when you need cash quickly, 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.
JB
Julie Bawden-Davis is a widely published journalist specializing in personal finance and small business. She has written 10 books and more than 2,500 articles for a wide variety of national and international publications, including Parade.com, where she has a weekly column. In addition to contributing to SuperMoney, her work has appeared in publications such as American Express OPEN Forum, The Hartford and Forbes.
Share this post: