Unexpected expenses come in all shapes and sizes, which means that the scenario in which you need to find money right away isn’t that hard to imagine. Ideally, you would have an emergency fund but what happens if that’s not the case? Well, here are the top 8 ways for you to borrow the money as fast as you can.
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Borrow from a friend or a family member
When faced with this problem, your first instinct would probably be to borrow directly from a friend or a family member. This is one of the things you can do at a moment’s notice, even without having to worry about credit scores and interest rates. The terms can be whatever you agree to and verbal agreement is usually all it takes.
The downside is that the people around you may not have that amount of cash lying around. Second, some people are not comfortable lending money and this may put a strain on your relationship. This is almost never worth it.
Lastly, some people are a little too relaxed, when there’s no legal contract obligating them to pay the money back by a certain deadline. While it seems like the simplest option out there, it’s definitely not something that you should do lightly.
Go to the pawnshop
A lot of the time, people are reluctant to sell, which makes them go to pawn shops and get a collateral-based loan. You give them an item (like a valuable piece of jewelry) and then they give you a loan based on its cost.
They hang onto this collateral until you’ve paid the loan and that’s it according to people providing jewelry asset loans from Phoenix, this is a lot easier psychologically, seeing as how it doesn’t involve parting with the said item.
You’re merely using it as a guarantee and you know that you’ll get it back. When it comes to jewelry, it’s not just about the value of an item. Sometimes, it’s a gift, heirloom, or a memento.
Sell an Asset
Instead of using an asset as collateral, you could just sell an item directly. The problem is that this is a more definitive solution and it’s not that great in scenarios where you need a minuscule amount of money.
For instance, selling your car because you need $300 is never a smart choice. Even if you have a necklace that’s worth that much, it may have sentimental value. Moreover, people who are buying from you will likely be able to tell that you’re desperate, which means that you won’t get nearly as much as the asset in question is worth.
Payday Loan
This is one of the quickest, most reliable but also the least cost-effective ways for you to get some money quickly. You see, payday loans are small loans that you promise to pay back in a matter of weeks (upon receiving your next pay). Payday loans don’t require a credit check, which sets them apart from all other loans (even secured ones).
Since they’re not lending you a lot of money, the risk is not that great. To compensate for the risk they’re taking, lenders dabbling in payday loans have APR that can be as high as 300-400%.
Ask for a salary advance
Instead of having to wait for your payday in order to return the money you borrowed, why not just ask your employer for a salary advance? This is a low-cost alternative to a payday loan but it’s not as ideal as it seems.
Sure, you may not live paycheck but there’s a reason why you need cash quickly at this point and you need to be realistic about this changing after your next salary.
Moreover, salary advance sometimes comes with an interest of its own, which is also something worth keeping in mind. Just because someone’s your employer, this doesn’t mean that they’re benevolent or that they will avoid predatory lender behavior.
Factoring
If you have an invoice coming but have no time to wait and actually collect it, what you could do instead is find a factoring company and sell it. At factoring companies, your account receivables are as good as live cash.
The best thing is that the majority of these factoring companies are taking as little as 1.5% to 5% in fees. The problem lies in the fact that they might not pay you everything right away.
For instance, they might give you 80-90% now and the rest once they collect. For sole proprietors, this is a great temporary solution.
Peer-to-peer (P2P) loans
Nowadays, you don’t have to go through a bank or a credit union in order to get a loan. What you can do is just go to a P2P platform and enter some of your personal data. Borrower’s information like your credit score, your debt-to-income ratio, your last salary, etc.
will help create a borrower’s persona and match you with the right lender. On the majority of these platforms, applying takes as little as 3 minutes and you can have the money deposited into your account in a matter of days.
401(k) loan
For a lot of people, taking money from your 401(k) is a nightmare scenario, seeing as how you’re borrowing now only to be left short in the future. However, there are numerous benefits to this loan type.
There are no credit checks and payments can be set automatically. Also, the money in your 401(k) is supposed to be earning investment returns. While it’s not there, it is unable to do so. Therefore, this activity could affect your retirement.
Wrap Up
In the end, it’s always better to have a contingency plan. For instance, having an asset, to begin with, is a great way to prepare for collateral lending. A good credit score will improve the loan terms that you’ll be offered on a P2P platform. Also, knowing which of your friends can and will help you out financially is great even when you don’t actually need it. Always be prepared!