Have you ever had to ask someone to borrow money?
Borrowing money is one of those topics that most people avoid talking about – we don’t know how to handle the situation and we don’t feel comfortable either asking for money or being asked for money. However, borrowing money is something that happens thousands of times today.
Asking to borrow money makes us feel like a failure, where we cannot pay something for ourselves and we need to ask someone else for help. Asking to borrow money may make some people feel like they are a burden to others. It does not have to be this way. Even if you are in a situation where you cannot pay back money that you are owed, borrowing money can be simple when handled correctly.
Here are 4 solid ways to borrow money to help you regain your financial health.
0% Purchase Credit Cards
With the economy struggling in these challenging times, more options are available to people to help with finances. One of these options is the 0% purchase credit card. These are cards that offer a period anywhere from three months to two years, where any purchases made will not have any interest tied to them. Interest on purchases can make the amount owed increase substantially, so being able to purchase large items (furniture, holiday shopping, etc.) without interest is great. However, it is important to remember that the 0% interest period is not forever – if the amount you owe is not paid back in the timeframe, then interest will be applied to whatever is still owed.
Credit cards are the most common way to borrow money, but this also makes them the most likely to be misused. It is easy to apply for a credit card, and it is also easy to forget about it and have your debt increase rapidly.
Another way to borrow money is through your bank. People feel comfortable dealing with their bank because there is already a relationship there – they have your financial history and have many options available to you based on your situation. Banks are a great resource to borrow money because they handle everything legally – they will not try and scam you or use illegal tactics. The only con with banks is the fees for their products – borrowing from a bank can result in high fees for applications and services. However, sometimes borrowing from a bank legitimately is better than borrowing from an illegitimate lender that could be handling things illegally.
Home Equity Loans
A home equity loan is also known as a “second mortgage”, where you can get a lower interest rate and spread out the borrowed time over a longer period.
Think of a home equity loan as a credit card – you get approved a certain amount (in this case – on your home’s value), and you can borrow up to that amount. Home Equity Loans are ideal when you have a large one-time expense to pay, like renovating your home. These types of loans do not have a changing interest rate, so they are an attractive alternative to a standard personal loan. You can apply for a home equity loan through any major bank.
Credit Unions are sometimes a much better alternative to borrowing money vs. a typical bank. Credit unions offer flexible borrowing options and have lower rates (sometimes as much as 2% points lower) than banks. One of the major benefits of a credit union is an “offer signature loan.” If you have an established credit history and are a member of the credit union, the “offer signature loan” is a great way to get cash for the short term. All they need is your signature (hence the “offer signature” title).
A short disclaimer – some people may say the best way to borrow money is from a family member or friend. While this may seem like an easy option, it has the potential for disaster. Borrowing money from someone can create tension, drama, and stress in the relationship and could damage it permanently. If you are in a situation where you need to borrow money, you are probably stressed or anxious already – adding more stress and more anxiety due to damaged personal relationships is not good for anyone. Of course, you may have a great relationship with the person, and asking to borrow money will not damage it at all. It would be great if that is the case, but you cannot guarantee it. Having social support is critical to our mental health, so try to avoid endangering that social support by asking family and friends for money.
The most important thing to remember about borrowing money is that you have options. You may feel confused about what to do, but there are different ways for you to get back on the right track. Do your research, talk to some professionals, and decide to get in a better place mentally and financially.