Best Ways to Borrow Money in Times of Need

3 min


money in hand

Unexpected expenses always come at the worst times. Whether it is the need for extra cash to cover an upcoming project, pay medical bills, pay for expenses after a recent job loss, or money for an urgent trip. Fortunately, there are several financial products and lenders tailored to cover your unique borrowing requirements.

Below are the best ways to borrow money when you find yourself in a tight situation.  Determine which option is right for you based on your unique financial circumstances. 

3 Fast Ways to Borrow Money

It does not take a catastrophe to experience a temporary cash crunch which may cause unnecessary financial strain. Switching jobs or moving sometimes causes urgent but short-term liquidity issues. Sometimes, the recommended rainy-day fund of six months may not be enough to cover an emergency expense. Here are some of the best options available for fast cash.

Getting Instant Loans

Instant loans let you borrow anywhere from $100 to $1,500. These types of loans are funded the same day, so you can cover any expenses at any time. These online lenders cater to a big consumer base, including anyone with bad or fair credit scores. You can pay back these types of loans in 14 to 62 days. 

Family and Friends

Depending on how much you require, a loan or gift from your family or friends might be a good option. However, make sure you can trust the person and feel comfortable discussing your financial matters. Before taking the loan, agree on the terms, interest rate, and payment schedule. Agree in writing, so everyone involved understands the terms and comes up with a loan amortization schedule that shows the required payments.

Pawnshop

The value of a pawnshop loan depends on the cost of the collateral you provide. Some items include electronics, antiques, and jewelry. A pawnshop evaluates the value, condition, and resale potential of the collateral and makes an offer. If the amount is near what you need, you get to walk away with the money and a pawn ticket the same day. You can collect your items after paying the loan within a specified amount of time – usually 30 days to a couple of months.

4 Effective Ways to Borrow Money

Some options for borrowing funds are more affordable than others. If you are looking for money during a tough time, to start a business, pay for college tuition, or even to finance your home improvement project, here are some of the best options on the market.

From Your Bank or Credit Union

A traditional bank is probably the first place you will consider when looking for a line of credit or loan. These institutions provide their customers with various products. Some financial products include savings and checking accounts, credit cards, personal loans, and retirement accounts. The wide selection makes your bank a flexible and convenient way to borrow money. Make sure you study the annual percentage rates (APRs) and loan terms when shopping at different banks.

Credit unions are member-owned financial institutions committed to offering competitive rates to the community. The community-based structure means credit units have less strict lending standards, making them ideal if your credit is not stellar. Personal loans from a credit union come with favorable interest rates. 

Low-Interest Credit Cards

Credit cards are a suitable option for borrowing money since providers only charge you the interest on the outstanding balance. You can avoid interest accrual when using a card that comes with a 0% introductory offer on balance transfers. Zero APR credit card also has no-interest financing on purchases for a specified amount of time. The period usually ranges from 10 to 12 months, after which you are subject to interest rates based on your creditworthiness.

Your Tax-Free Savings Account (TFSA)

The TFSA provides an option to store your emergency fund in a place where it grows tax-free and can be withdrawn at any moment without cost. A sufficient rainy-day fund in a TFSA can carry out urgent repairs around the home, for example. TFSA is also a better option for Canadians with limited income than a Registered Retirement Savings Plan (RRSP).

Cash Advance Overdraft

This is money your bank will temporarily offer you when your chequing account is overdrawn. The amount ranges from a couple hundred to thousands of dollars. Cash advance facilities are ideal for solving short term problems that require a relatively moderate amount of cash.  You can also access a cash advance using your credit card. However, overdrafts are expensive because banks charge a fee to protect their accounts in case you don’t have enough cash to cover the transaction.

Start an Application Today

Whether you require a long-term loan or fast cash, take your time and research the options available. Ask questions before you borrow money. Assess how much money you need to find the best way to borrow. Ask if there are fees associated with the loan, how long you must pay back, and if the lender does a hard credit check that may affect your credit scores. 

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