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Sources for Borrowing Money



When you're in a money pinch, there are many causes of capital available. Every one has various interest rates, fees, and terms. When you really need to borrow money, consider all these items carefully.

Bank Loans

The best, lowest-cost form of loan should be to take a loan from a bank. It requires good credit along with a good relationship together with your bank. Depending on your reason for borrowing money, you may want to set up collateral for that bank. You're going to get the cheapest interest rates with secured loans. They are loans against an asset, like a house or perhaps a car. They carry lower risk to the bank so they also come with lower rates of interest. Unsecured loans and lines of credit carry higher rates of interest.

Credit Cards

Credit cards are a super easy but very costly method to take a loan. Should you just have cash for a few weeks, the price could be reasonable. But when you'll need cash for an extended period of time, you will find usually cheaper methods to take a loan. Also make sure you understand your payment cycle, rates of interest, and payment information before using this method.

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Loans from Members of the family

Getting a loan from the family member or friend can be very flexible. You can set the terms with the lender. However, borrowing from members of the family and friends can stress your relationship. Make sure you set everything out in writing, including the interest rate, payment schedule, and penalties for overtime.

Peer Lending

If you need a loan for a small company venture, you can take a loan online through peer lending. Peer lending websites connect borrowers and investors who are able to connect with fund a business idea, pay off debt, or finance another kind of purpose.

401k Loans

For those who have money held in a 401k plan together with your employer, you can usually borrow up to 50% of the worth of your account. You pay interest on the loan, however the interest goes back to your account. Remember that you have an opportunity cost with this option. The cash you borrow can't grow being an investment until you repay the borrowed funds. Be also aware that you will have to pay back the loan in full shortly after you depart the organization. Talk to your tax professional to know the tax ramifications that this could cause in retirement. Your interest is usually considered pre-tax money and will also be taxed upon retirement, while you paid it with after-tax dollars.