Borrowing money is risky business. If you seek help in the wrong places you could end up living the ultimate financial nightmare: the never-ending loan!
There are a couple of situations when borrowing money is appropriate:
First, when it’s profitable, meaning that you earn more with the borrowed money than you pay in interest.
Second, when you find yourself in a financial emergency and you simply don’t have a choice.
Let’s explore some of the smarter ways to borrow money.
Borrowing From Family or Friends
If the circumstances are right and proper precautions are taken, then borrowing from a family member would be good because you could avoid the notoriously high interest rates associated with some forms of borrowing (like neighborhood loans).
To make sure that everyone is on the same page, draft a legal document specifying loan rates, loan terms and a due date. You can find the necessary forms for cheap, or even for free, at any number of legal-information websites. Type the phrase “promissory note” into Google to find some example templates.
Perhaps more than any other type of loan, a personal loan from a family member or friend will require making payments on-time and perfectly understanding just what will happen if payments aren’t made on time, or if you end up defaulting on the loan (being unable to pay it back at all).
Nobody likes seeing their friends or family spending on frivolous, unnecessary things like vacations or luxury items when they’re still owed money, so if you’re going to take this route, then you’d best be prepared to make some financial sacrifices until you can pay back all the money you borrow.
Peer-To-Peer Lending
Peer-to-peer lending might also be a good way to find lower-rate loans, but it’s a little bit more technical and complicated. To utilize peer-to-peer lending, you’ll need to search for a lender on websites like Lending Club or Prosper.
The rate of interest you’ll pay will depend on your credit, just like it does with traditional loans. If your credit score is very low, you may not be able to borrow this way at all. However, if you have a good credit score and need a small, short-term loan, peer-to-peer borrowing can be quite effective.
Credit Unions
Credit unions offer flexible lending and lower interest rates than traditional banks. In fact, according to DataTrac, the average credit union interest rate on a car loan is 1.5 to 2 percentage points lower than the same loan offered by banks, and home equity lines of credit average about half a percentage point lower as well.
Credit unions might also offer signature loans – an unsecured loan guaranteed only by your signature. Obviously, you’ll need membership and good credit to qualify for these types of loans, but if you’ve got both of those conditions covered then have at it!
Car Title Loans
If you are really struggling financially and are in need of immediate cash, then you may need to consider a car title loan from Car Capital Financial.
If you have paid off or nearly paid off your vehicle, then it’s likely that you would qualify for one of our safe, affordable and reliable car title loans.
The process of obtaining a car or vehicle title loan is almost guaranteed to be much faster than that of a traditional loan. Our title loans work by awarding you with a cash loan amount based on the value of your car, in exchange for taking temporary ownership of your car’s title. Title loans are issued based on the borrower’s ability to repay the loan.
You will then have up to 3 years to gradually pay back your loan in monthly installments, during which time you will remain free to continue driving and using your vehicle as much and however you want, as long as you don’t start missing payments!
To talk to one of our loan specialists, please call us now at 1-888-500-9887.
What Should You Do?
At the end of the day there is no one-size-fits-all solution when it comes to borrowing money, but if you’re going to borrow, then make sure to consider these three top options to reduce your costs and the amount of time it takes you to get out of debt.