Life is full of surprises, but when it comes to financial emergencies, they are never particularly helpful. Unexpected medical bills, car trouble, and even domestic emergencies. They can all lead to significant problems that need fast solutions. When it comes to borrowing money, of course, this leaves you with a problem.
A traditional loan, for example, can often take a long time to get through. So, if you need to get your hands on cash in a quick way, you might need to consider more risky strategies. We’re going to take a look at some of your options – and underline the pitfalls you might encounter. Let’s take a closer look.
Friends and family
If you have friends or family with little savings set aside, always ask them first. The chances are that they have some money in a savings account that isn’t earning them lots of interest. So, by offering them a better deal, you will be doing them a favor. Whatever interest rate you decide will be far better for both of you. They will get a better rate than their savings while you will be paying significantly less than you can get anywhere at any bank or creditor.
Banks can be an option for you, as long as you have a good credit rating. However, they can be expensive – especially if you go down the quicker route of taking on an unsecured loan. These types of personal loans can range between anything from 13% to 20%, depending on your financial circumstances. Bear in mind that if you miss any payments, you might see a hike in your interest rates and a hit on your credit rating.
Take out a credit card
Again, you’ll need to have a good score at the credit bureaus to apply for a decent credit card. Your best bet is to find a card with 0% interest on your purchases, meaning you won’t pay a penny in interest if you pay it off before the end of your term. If you need cash, however, credit cards are best avoided. There is a significant charge on cash withdrawals from as little as 2% to as high as 25%. And, the interest starts from the second you take money out of the machine.
Think about taking on a longer-term loan, too. You will tend to get lower interest rates, but you will have to put up your home as collateral, for example. There are some interesting examples out there. A 401(k) loan, for instance, might be a good option for you. These loans won’t impact your credit rating, and any interest charged goes straight back to your account. In some cases, this makes the loan entirely free – or, at least, at a minimal cost.
Payday or installment loans
Payday and installment loans can be a handy tool, but you have to use them right. Both forms of loan offer quick decisions, and the money often gets paid straight into your account within 24 hours. However, their enormous interest rates are almost predatory in nature, so it’s vital to be able to pay them back as quick as possible. According to a guide at PersonalMoneyStore.com, it can cost you a significant amount. Interest rates can often increase into a four-figure territory, so it’s vital to pay them back as quick as you can.
Peer-to-peer lending is a relatively new phenomenon. But, it can be a handy – and good value – way of borrowing money fast. However, like all other loans, the interest rate you get will be based on the amount of risk you appear to have – based on your credit report. A good loan rate is something like 5% – or around that figure. But, if your credit score is poor, you can expect to pay around 35% across the length of the loan period. That said, it is still much less than taking out a payday loan.
Sell all your stuff
You don’t have to take out loans, of course – especially if you have items at home, you can sell. If you have plenty of gadgets and devices around the home, think about selling them. Most household contains plenty of old gear that never gets used anymore so a clear out can find you quick cash. Think about electronics, books and DVDs, and old games consoles. Kids clothes are always in demand, too. Of course, the way to raise funds fast is by selling for the best price. It’s best to avoid week-long auctions on eBay, for example. Look at Facebook for a local buying and selling page to see if there is a way of selling your items as quick as possible.
Got a spare room in your home? Then rent it out. You can sign up to a service like Airbnb and start advertising right away. If you price your room much lower than anywhere else in the area, it’s going to attract attention. You can expect to pull in around $60 per night on average – more if you have more facilities. Think about renting out your car, too. Services like https://turo.com let you hire your vehicle to travelers, business people and much more. You can earn up to $1,000 each month – maybe more if you play your cards right. You can, if you are willing, even rent out things like your wedding dress. People will happily pay $100 a day if it fits – and suits – them.
Finally, think about borrowing from your life insurance. You won’t face any tax or credit implications, as you have already paid into your policy. You can continue to pay on a monthly basis, and if the worst happens before you pay it all back, your family will receive less. The only big issue to watch out for is borrowing beyond what you have paid in. There will be tax implications, so make sure you understand where the land lies.
Hope this has helped – let us know your thoughts in the comments section below!