Have you ever faced a financial need that demands to borrow? If your answer is “no”, your time is coming and when it comes, you will need a place to turn to. The point is, no one is immune to the circumstances in life that demands one to borrow. Life is characterized by surprises and there are times when borrowing is the only way to get going. A recent study shows at least 78% of US citizens live on paycheck-to-paycheck, while another 56% live on at most $100 left over in a month. Imagine yourself living in such conditions. You will definitely need an alternative way of covering unexpected costs.
You really need to be prepared in order to successfully borrow. But there are yet other problems that can make things difficult for you even if you are well acquainted with borrowing option. For instance, if you have a poor credit history and not in good standing with a creditor, or you are short of an asset to use as collateral, you may not be approved for a personal loan in a bank. This means you will need an alternative way of getting the help you really need.
Incontrovertibly, there are different loan options, each with advantages and disadvantages. Take note, irrespective of the approach you take, you will be required to repay a higher amount because of the interests. It is always important to make payments within the agreed time to avoid penalties.
Ways to Borrow Money
In this blog, we are going to discuss six methods of borrowing money. Follow along and see the best that you can take in case you are in need. So, let us begin…
1. Borrowing from family members or friends
Family members and friends are the best people to turn to in case you need financial help. But how can borrow from them? Well, the following tips will help you in this regard:
• List down some friends and exact family members who can offer you financial help. Let this be the people you believe can afford to lend you. Your relationship with them plays a significant role. Choose those ones you are confident can help and contact them.
• You should be straightforward. It is good to be friendly but just be straightforward. Beating around the bush may give your friend and family members a wrong view. You can start with a simple talk before asking for money so as not to be perceived uncaring. Be direct while making the request but remain polite. Reassure the people you are borrowing from that you actually understand if they cannot help you.
• Be open enough to tell them the reason why you need funds, or how you intend to borrow. It is their right to know how you intend to spend the amount you are borrowing and you shouldn’t deny them that.
• Promise to give interest on the money borrowed. This will make them feel more secure in giving you a loan.
• Give them something valuable as collateral. This will prove to them that you are serious when it comes to repaying.
• Accept their response. Whenever you ask for a favor from others, always give room for ‘no’ and when it is their answer, do not feel as though they are refusing to lend you.
• Sign the agreement stipulating the terms of borrowing. This will help avoid misunderstandings.
• Appreciate and repay within the agreed period of time. Paying the full amount in good time will help keep your family or friendship relationship.
2. Borrowing from a bank or other financial institutions
Borrowing from financial institutions is the most common avenue. There are a number of things that lenders will examine before your application is either accepted or rejected. Consider the following:
• Understand your credit. Before even applying, you need to know your credit score. Banks will always consider your credit score while determining the terms under which to lend you. With bad credit, you are likely to be approved for a loan but at a very high-interest rate. In some cases, lenders may demand a cosigner.
• Prioritize your bank or even a credit union. If you already have an account in a bank, it is the right place to go for a loan. Different credit unions that can be found here best money lender in Singapore always offer loans at lower interests to members because they are nonprofit making organizations.
• Apply. The most effective way is to personally approach the lender and respond to questions to help them make informed decisions.
• Know the terms of lending. If you are approved for a loan, ensure you go through the terms and make sure you understand them.
3. Credit card borrowing
The following tips have proved helpful:
• Use the card for a purchase. If you intend to borrow to finance the purchase of an item, it will be appropriate to use a credit card to meet the costs of the product when you lack cash for it.
• Contact your credit card company and ask them questions regarding the consequences of advancing credit card cash.
• Advance cash using a credit card. If you need cash for something else you cannot pay by means of credit card, ask for cash. Many credit card companies have this provision.
• You can get cash from ATM using your credit card along with your pin number.
4. Payday Loan
Here is what you can do;
• Research various payday loan lenders. There are so many companies offering payday loans out there. If you instantly need cash, this is the best place to seek help. However, you need to be careful not to be conned. Look at customers’ reviews to determine legit companies.
• Make sure you understand all the terms of the loan. Since these, loans have very high-interest rates, they should be your last resort.
• Get ready the things you need for the application. Gather all the necessary documents and be ready to respond to lenders’ questions.
• Make the application. While this can easily be done online, it is advisable to visit the local branch
• Do not renew the loan. These loans are supposed to be repaid within two weeks. Nevertheless, lenders may offer you an opportunity to extend the loan duration. This provision comes at a cost and that is why you should avoid it.
5. Pay Day Advance
• Look at the policy of payday advance in your company. Most of the companies have a specific period of time within which advances can be given.
• Contact the right individual. Where your company is not so large, you may just talk to your boss. If it is a large company, the right person to approach is your human resource manager.
• Explain why you need funds. Many companies will require you to explain how you are going to use the money. Explain that without going to more details.
• Ask at the right time. If you want your request to be granted, do not ask when your bosses are very busy.
• Fill the necessary documents. You must fill forms that relate to your advance for documentation.
Conclusion
There are different ways of borrowing money. In this article, we have discussed five different ways depending on the kind of loan you want. Follow these tips for a successful application. Remember each type of loan has pros and cons. You will choose the one with one that suits your condition.