Met a medical emergency? Lost a job unexpectedly? When you need money fast and have used all of your emergency funds or maybe never had one, feeling strapped for cash and nowhere to go is natural. Do not worry as you are not alone. Sometimes many may need to borrow money for similar reasons and trust the fact that there are multiple options. The best and most obvious way is to save money while avoiding getting into debt. However if that, is a distant possibility, the ultimate question arises as we want the finest source from where to borrow some finance?
Let us check out the best possible sources to borrow from when in a pinch. All the options below have their own pros and cons, hence choose carefully and make sure that you understood the terms and conditions thoroughly before you make any choice.
Personal loans can finance your personal expenses and substitute high interest loans. They are available via various banks, money lenders, online finance partners and can be of two types, one secured i.e. backed by collateral entities like cars, houses and the other unsecured i.e. no collaterals required. Depending on your credit source, the interest rate that you qualify for would be determined. It is worth using a personal loan calculator to get a beforehand idea about the monthly repayment amount and the total cost of the loan based on the amount you need. Also remember personal loans and payday loans are different, so feel free to visit https://www.achievefinance.com and get familiarized.
Peer to peer / P2P lending
Social lending or crowdfunding is a source from where you could get personal loans from unknown individuals who are willing to borrow and lend money. Based on the borrower’s credit score profile, investors can strike a deal. The lenders can create an income source and earn a higher return on investment through the interests paid by borrowers. By doing this the borrower gets money that otherwise he/she would not get from standard sources. Thus, the online platform connects lenders and borrowers by providing attractive interest rates. However it involves more effort, time and risk than usual methods through an official financial institution.
Getting money from the U.S Government and government chartered entities like quasi –public agencies, have favorable interest rates when compared to alternative sources of financial support. Also borrowers are allowed extended periods for the repayment of loans. However paperwork for such loans can be daunting.
They are the traditional source of funding personal loans, construction loans, mortgage loans and consumer loans. Local bank personnel are at hand to resolve questions and aid in paperwork hence one can feel comfortable working with their own bank. However they are known to charge hefty fees in the form of ATM transaction charges, loan application fees or minimum balance fees, maintenance fees and so on and so forth. Also they can resell your loan to other banks/finance companies resulting in a change in charges and procedures.
They are non-profit cooperative enterprises that include members of a particular group or community and are famous for lending money at more favorable rates than banks. Also application charges are less. However they might offer only a limited variation of loans or plain vanilla loans
Financing companies offer longer-termed loans and also focus in providing funds for smaller purchases such as major appliances at competitive rates. Also the overall fees can be low as opposed to banks and other lending entities. The approval process is usually fairly quick. However, the quality of the customer service or additional services (like ATMs) may not be same as other sources available.
Retirement/401(K) Account Loan
This would be the last resort to borrow from and is purely meant to be for individual’s retirement only. This is the money from your contributions and grows on a tax deferred basis hence you can use the money virtually for anything. There is no application fee or underwriting if you wish to withdraw it, however, you lose out on tax deferred funds that might have compounded with interests. One needs to pay taxes and 10 % penalty if this fund is withdrawn before 59½ years or if you wish to borrow against it, remember that until you repay the loan, any additional contributions would be prohibited. But life happens and sometimes you need to make choices cautiously.
When you are in a financial need to fund something like higher education, new home or car, it’s essential not to rush into making a choice. Hope the above options must have added to your understanding of choices to borrow funds. One should meticulously consider the pros and cons of every available option, because the choice to get emergency cash at the best and most manageable way solely depends on your specific financial situation. Good things come to those who take the time needed but best things come to those who analyze and make informed decisions!