9 Best Ways to Borrow Money (Cheap & Fastest)

Written by Bradon MatthewsUpdated: 16th Feb 2022
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No one likes to borrow money. It puts you in an uncomfortable position, especially if you are asking a friend or family member. But life loves to throw us curveballs.

An emergency fund protects you against sudden financial problems when they occur. Unfortunately, life doesn’t always go as planned. Sometimes a financial emergency springs up, and you just don’t have the money to deal with it.

When this happens, you’re left with two options: you can simply ignore the problem, which often makes it substantially worse, or you can borrow money. Most people will opt for the latter.

That said, not all borrowed cash is the same. Where and how you borrow money matters quite a bit.

To help you make the best decision possible in the face of a financial emergency, we’ve compiled a list of the best ways to borrow money. Here’s what you need to know about each method.

Cheapest Ways to Borrow Money

To start, we’ll look at the best ways to borrow money if your goal is to minimize costs over the long term. Below are the cheapest ways to borrow money.

#1. Apply for a Personal Loan

The most obvious and straightforward way to borrow money is often to apply for a personal loan. Personal loans come in many forms.

The cheapest personal loans tend to come from banks or credit unions. These financial institutions often charge low APRs and have a decent amount of flexibility regarding repayment plans.

If you’re already a member of the bank or credit union you are borrowing from, you may get an even better deal on a personal loan.

If you’re looking for the absolute best deal possible, you may also inquire about a secured loan. Secured loans take something of yours as collateral. These loans tend to have even better rates than unsecured loans from banks or credit unions.

All that said, these institutions will often require better credit than some other options. As such, they may not be the best choice for those with bad credit or little credit history.

Banks and credit unions frequently do a hard credit check when you apply for a loan, meaning the application may negatively affect your credit score (for a brief moment).

One final thing to consider is that the application process can be a bit slow, so this may not be the best option if you need the money ASAP.

#2. Get a 0% APR Credit Card

Another common option for those in need of funds is to get a 0% APR credit card. These cards work by offering an introductory period, during which there is absolutely no interest charged on the money you borrow.

In practice, this means you can borrow money for free. All that is required is that you pay off your balance before the end of the introductory period.

Should you let the introductory period expire, you may wind up with some interest fees, but only for the period following. In other words, you won’t be retroactively charged interest if you don’t completely rid yourself of your debt by the end of the intro period.

This makes 0% APR credit cards a fantastic choice for almost anyone, as they are one of the only ways to borrow money at literally no cost and are fairly forgiving should you slip up.

That said, they don’t just give these cards out. Applicants are required to have high credit scores to qualify for 0% APR cards.

If you have bad or even just mediocre credit, this option may be off the table for you.

If you can qualify for a 0% APR card, though, you should strongly consider going this route should you face an unexpected emergency.

#3. Personal Lines of Credit

A cross between a credit card and a traditional loan, a personal line of credit is essentially a revolving credit account from which you can draw money freely up to a certain amount.

Personal lines of credit are primarily offered through banks. Qualified applicants are granted a line of credit with some upper limit and are then free to pull as much or as little from that credit line as needed.

Like a credit card, personal lines of credit only charge interest on the amount you use. This makes personal credit lines a fantastic choice for those unsure how much they will need and who don’t want to deal with interest payments on money they don’t wind up using.

It isn’t easy to qualify for a personal line of credit, though. Banks want to make sure they’ll get their money back, and as such, they require applicants to have good or excellent credit scores.

Additionally, the money can take some time to hit your account. You might have to become a member of the bank or credit union you want to open your credit line with, and even when that’s done, it takes a while to review your application.

Still, this is one of the best options to borrow money for those looking to deal with an unforeseen expense without being charged interest on anything more than what they need.

#4. Home Equity Loan

A home equity loan is a type of secured loan that leverages your equity in your home to secure your funds. This has a few advantages.

For starters, this kind of loan tends to have better interest rates than unsecured loans. Because the lender knows they won’t outright lose their investment, they are often willing to offer lower rates.

Additionally, home equity loans tend to have slightly more relaxed requirements. While a good credit score is still important, applicants may have a better chance of getting a home equity loan if they can’t qualify for an unsecured loan.

The interest charges do begin immediately, though. This means that there is no way to borrow the money without losing out to some degree.

#5. 401K Loan

401K loans are a unique entry on this list. Unlike other loans where you borrow funds from someone else, 401K loans allow you to borrow money from yourself.

You will pay interest on these loans, but the interest rates tend to be quite low compared to other options.

More importantly, the interest you pay goes back into your 401K, meaning you aren’t really losing anything. In some ways, these loans put you in a more financially stable spot, as they actively grow your retirement account.

This makes 401K loans one of only two entries on this list that can provide you with funds at no net cost.

Another bonus is that a defaulted 401K loan won’t impact your credit, as these loans aren’t reported.

There is a downside, though. In the time between taking out the loan and paying it back, your money isn’t in the 401K. This means that you’re missing out on investment growth.

Should you be unable to pay the money back, things get quite bad. You’ll have to pay taxes on any defaulted funds, and you’ll also face a 10% penalty if you’re younger than 59 and a half.

If you’re confident that you’ll be able to pay back the money, this can be a great no-cost option for a loan. That said, only move forward with this option if you are certain you can pay back the entire 401k loan.

Fastest Ways to Borrow Money

The options above are all the cheapest ways to borrow money, but what happens when you need the money as fast as possible?

Sometimes situations pop up that can’t wait. You may not have time for a lengthy application process.

When this is the case, turn to the following options. These are the fastest ways to borrow money.

#6. Ask a Friend or Family Member

While it can be a bit uncomfortable, asking for a loan from a friend or family member is often the most financially sound choice you can make.

Friends and family will often charge you less for a loan than anyone else (if they charge you at all). This means you won’t wind up with burdensome debt because of your financial emergency.

In addition, friends and family don’t tend to do a formalized credit check before loaning you some cash, meaning you won’t have anything impacting your credit score.

As far as speed goes, borrowing from someone you know tends to mean a direct payment. You can typically access your money immediately, meaning a serious emergency can be dealt with swiftly.

This is arguably the best way to borrow money in general. The financial ramifications can be pretty much nothing. Just make sure you show proper appreciation and pay the loan back as fast as possible to avoid awkward situations or burning a personal relationship.

#7. Get a Loan from an Online Lender

With the introduction of the internet, pretty much every service imaginable is available online. Personal loans are no exception.

Nowadays, there are a plethora of online lenders ready to offer personal loans to applicants of all backgrounds.

Each online lender works a bit differently, so you’ll want to do your research and compare your options to get the best deal.

That said, online lenders tend to offer loans to those who wouldn’t qualify at a bank or credit union, making them a good choice for those with poor credit.

Additionally, online lenders often have quick application processes and can deliver funds in as little as one business day.

If you need your money fast and don’t want to leave the house, online lenders are here to help. Here are a few lenders we recommend:

#8. Payday Loans

Payday loans are short-term loansmeant to function like an advance on your paycheck. You borrow the money and pay it back as soon as you get paid again.

The money from a payday loan hits fast, normally within a single day

Payday loans tend to have very high-interest rates and fees. Because the lender needs to make money in a very short repayment period, you can expect the funds to be expensive.

This is bad enough on its own, but should you miss your payment for any reason, the high-interest rates can quickly become crippling.

For this reason, payday loansshould be a last resort, and we highly encourage exploring other options.

>> More: Best Direct Deposit Loans

#9. Pawnshop Loans

Pawnshop loans are essentially another type of secured loan taken from a pawnshop.

Pawnshop loans work by using an item as collateral. You bring the shop an item of yours, they appraise it, make you an offer, and should you accept, you walk out with the money.

Pawnshop loans are extraordinary fast, and as such, they can be a great option if you need cash immediately. They also won’t typically impact your credit.

That being said, the fees pawnshops tend to charge can be quite high. If you can, it’s worth exploring other options before accepting a pawnshop loan.

What Is the Easiest Way to Borrow Money Online?

The easiest way to borrow money online is to go through a trusted online lender. Many sites (such as personalloans.com or badcreditloans.com) work to connect applicants with lenders across the country.

These sites have streamlined application processes and can deliver funds directly to your bank account in as little as a single day.

How Can I Borrow Money Fast?

The fastest and safest way to borrow money is often to borrow from friends or family.

If that isn’t an option, we strongly recommend using a trusted online lending website. Avoid payday loans and other loans that charge predatory interest rates.

How to Manage Borrowed Money

Sometimes borrowing money is your only option. Still, you’ll want to be financially responsible so you can minimize any costs.

Here’s how you should handle your borrowed cash.

#1. Make Monthly Payments

Setting up recurring payments will keep you on track and avoid any late fees. If you can, automate the payments, so it requires as little effort as possible. Try to make the monthly payments as large as you can to pay the debt off faster.

#2. Only Borrow What You Can Pay Back

When taking out a loan, think about how much you can truly afford. While it can be tempting to borrow a large amount, missing payments or defaulting will only hurt you in the long run.

Stick to reasonable loan amounts with payments that you know you can manage.

#3. Watch Out for Fees

Each loan has different terms and conditions. The interest rates are an obvious one but don’t forget to look at the fees.

Some loans charge origination fees, meaning you pay just for borrowing. Others charge late fees. Knowing what fees you’ll face, and planning to avoid them, is key to minimizing the financial impact of your loan.

#4. Watch Out for Sky-High APRs

High-interest rates add up quickly. The wrong loan can easily send you into a financial spiral, trapping you in a payment plan that ends up costing far more than you borrowed.

When shopping for loans, pay close attention to the APRs. Take your time and shop around so you don’t wind up paying substantially more than you should.

Bottom Line: Best Ways to Borrow Money

Sometimes life hits you with an unpleasant surprise, and you just need to borrow money. Luckily there are a host of ways to get a loan when you need one.

The best way to borrow money will depend on your situation, but there are a few considerations that hold true regardless of your circumstances.

Stick to loan amounts you know you can afford and don’t miss payments. If possible, look for options that offer ways to avoid fees altogether.

Take your time and compare your offers. Apply for loans using the methods listed above and choose the most financially viable option for you.

By doing this, you’ll get the money you need now while avoiding any serious repercussions later.

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Bradon Matthews
Bradon Matthews

Bradon Mathews is a personal finance writer & product analyst with a breadth of experience. He enjoys analyzing market information and trends to help you make sense of the complex and ever-changing world of finance. His passion is providing practical advice so you can feel more confident managing your money. Bradon attended Colorado State University where he studied Philosophy.