Borrowing money is the norm today. You’re probably going to need a loan at some point in your life. It could be for home improvements. It could be for college courses. It could be to start your own business. Whatever your reasoning, there are plenty of options when it comes to borrowing money. These range from the traditional options to brand new ones. Here are your top choices.
Unless you’re a student seeking federal student aid, banks are probably the first place you think of when you want a loan. These institutions bring in money via deposits and distribute it via loans. As a result, your loan options will likely be the most flexible at a bank. You will also have the opportunity to refinance your bank loans to get a better interest rate.
2. Credit Unions
Credit unions are institutions controlled by members and people who use their services. If you belong to one, these are a great place to take out a loan.
3. Peer-to-Peer Lending
When you choose to avoid the traditional financial institutions, such as MaxLend loans, you can always resort to peer-to-peer lending, enabling individuals to lend money to each other without an intermediary. You will connect with an individual over a p2p lending platform with this method. Then, you will agree on an interest rate and receive your funds.
The lending platforms generally allow you to display information about yourself and your business so lenders can make informed decisions. However, while this is more convenient, it can be more costly because the investors want to ensure they receive their money.
4. 401(k) Plans
One way to take out a loan is to borrow money from yourself. Your 401(k) plan will often allow you to take out a loan and withdraw money from your retirement account. Permanently taking out money from your 401(k) will incur taxes and fees if you are under 60 years old. However, taking a loan out of your account will not since you will repay the funds.
Most accounts will allow you to take up to half of your funds out as long as you plan to repay them within five years. This option is great because you don’t have to worry about taxes. However, you still have to repay the loan with interest.
5. Credit Cards
Anytime you use your credit card, you are technically taking out a loan. However, you can also use credit cards for actual funds. These are called cash advances and have been around for a while.
There are plenty of ways you can borrow money. You can visit a traditional institution, such as a bank, to take out a loan. Credit card companies are also a relatively common source of money. You can also use more modern versions of lending where you borrow from individuals. Likewise, you can borrow directly from yourself. While each is a viable option, each one comes with specific advantages and drawbacks. Take the time to learn about each one before you make your decision.