What is the easiest way of borrowing money?
The subject of borrowing money is something that comes up in just about everyone’s life except the life of an elite member. Millions of consumers are in the midst of overwhelming debt. Such people need money for groceries, fuel expenses, clothing, vacations, shopping, school supplies and sometimes just to get from one week to the next without completely losing their minds. Several ways of borrowing money exist. They all have advantages and disadvantages to them. The following is a comprehensive look at eight ways to borrow money and a breakdown of each one. In the end, the consumer will see what is the easiest way of borrowing money:
1. Asking Loved Ones
Many people ask their friends, family members and acquaintances if they can loan them money before they seek other resources. The benefit of asking friends and family members is that the process usually does not go through the credit bureaus. Residents may or may not have to repay such loans, and their lenders may be extremely lenient about them.
The downside to seeking financial assistance from family members and friends is that they often do not have the funds to help. Still, there is no foul in asking someone for help. The worst thing that can happen is that the individual will deny the request.
2. Using a Credit Card
Most credit cards have the cash withdrawal option. A consumer can take money from an ATM to spend on anything that he or she likes as long as that money is on the person’s available balance. A consumer could take a small loan off his or her good standing card and give it back with the next payment.
The downside to borrowing money from a credit card is that the “loan” proceeds are limited. Furthermore, the borrower will have to pay back the cash advance at a higher interest rate than he or she would have to repay a normal credit card transaction.
3. Applying at a Local Bank
Most consumers have at least one bank account that they have with a financial institution in the neighborhood. All financial institutions offer personal loans. One option that a person can take to obtain a cash advance is to apply for a personal loan. A personal loan through a bank is typically in the range of $500 to $3,000. The banks offer the loans at an interest rate that fits the consumer’s credit score. The user can receive the funds that he or she needs for any purpose. Personal loans are “personal,” so there is no wrong way to spend them.
The downside to applying for personal loans is that they require mounds of paperwork and a good credit score. A traditional lender will want to know all of the applicant’s income and all of the applicant’s expenses. That person will have to bring in documentation to verify such claims. Furthermore, lenders determine approval for traditional loans on the applicant’s credit score. Therefore, struggling consumers have a high chance of receiving a denial of their requests.
4. Peer-To-Peer Lenders
Peer-to-peer lenders are an entirely different genre of loans than the previously mentioned ones. Peer-to-peer lending is a process that involves strangers that are interested in investing in or helping other people. Prosper.com was the very first peer-to-peer lending site that existed in the United States. Prosper has a loan range of $2,000 to $35,000, and the site offers fixed term advances with single monthly payments and zero prepayment penalties.
The way that the Prosper site works is that the interested person has to open an account. Such cannot be done without that person going through a verification process. The verification process involves having a code sent to his or her address. The consumer may also have to answer public records information. The individual will have to provide bank account information, as well.
Once the person verifies his or her identity, the next step is requesting a loan. The person has to create a thoughtful ad that states the purpose for the advance and the overall success and repayment plan. The borrower can run the ad for one day or several days. The investors can then offer the borrowers money for their ventures.
The negative part of going through a service such as Prosper is that the person’s credit score has to be at least 640 points for the site to consider the loan. That makes it difficult for a struggling person to get back on track. Peer-to-peer lending does not appear to be the way to go for the poor-credit consumers.
5. Pawn Shop Loans
Pawn shop loans are advances that consumers can receive if they have items that are of some value. Pawn shops provide loans to consumers who have gold and silver jewelry, cell phones, computers, gaming systems, furniture, televisions, radios and the like. A consumer can bring an item into a pawn shop and offer it to the pawn shop. The attendant will receive the item and its value and make an offer to the person. If the person agrees to allow the pawn shop to hold the item and take the money that it offers, then the two parties will sign a few brief documents and make the exchange.
The consumer will have approximately 30 days to repay the advance and retrieve the item. If the consumer does not repay the advance, the pawn shop will resell the item to get back the funds that it lost. The positive side to seeking pawn shop loans is that the borrower can receive cash within a few minutes. The negative side to pawn shop loans is that they are extremely low. For example, a pawn shop may offer a person $30 for a computer system that is worth $200 or more. The loans that one can receive from a pawn shop are usually not good enough to provide real assistance for a late bill or a large emergency expense. Many consumers would be better off seeking the funds from another lending source.
6. Payday Loans
Payday loans are popular items that consumers request these days. Thousands of payday lenders offer their services throughout the United States. Payday advances received their name from the way that the lenders operate. Payday lenders focus their cash advances on an upcoming paycheck rather than the consumer’s credit score and such information. They are short-term cash advances that can provide coverage during an emergency for someone who has a stable job and a decent income.
To qualify for a payday loan, a consumer must be 18 years of age or older. Minors cannot sign contracts, and a payday advance is indeed a contractual agreement. The applicant must also have a job for at least 90 days and proof of such an occupation. The individual must live in the country where he or she is requesting the advance, as well. Furthermore, the applicant must have a bank account that has no derogatory transactions and has been in good standing for at least 90 days. The lender will disburse the loan funds into that account. The lender will also take its payments from that account on the due date. The bank account is non-negotiable. Payday lenders will not lend funds to people who do not have a bank account.
The consumer must complete an application form to receive a payday advance. The application form will ask for information about the person’s address, job, pay rate, next pay date and so forth. It will provide the consumer with an answer and then draw up a contract for that person to sign. The contract will state the loan amount, the finance charges, the repayment date, the repayment amount and other pertinent information. The consumer must read the contractual agreement and agree to all of its terms for the process to continue. The consumer must sign the contract and return it to the lender to receive the payday loan disbursement. Lenders usually send disbursements within 24 to 48 hours after the consumer turns in the signed contract.
The borrower usually has about 14 days to repay a payday loan. The lender retrieves its funds by taking the money from the person’s bank account. The borrower must notify the lender if he or she will need to request an extension on repaying the proceeds. Some lenders are willing to provide extensions, but they must abide by the laws. Many states implemented laws to regulate payday loans and extensions because too many lenders were using predatory practices.
The positive side to asking for payday advances is that they can provide a consumer with some quick cash. The negative side to borrowing such advances is that they have high interest rates and must be repaid very quickly. These quick-cash advances are good for people with bad credit who have emergencies and can repay the advances on payday. They are bad for people who really need long-term cash advances.
7. Installment Loans
Online Installment loans are another option for people who need access to quick funds. They have the same criteria that payday loans have. The difference between installment loans and payday loans is that the lenders allow the borrowers to have additional time to repay the advances. Installment lenders usually provide their borrowers with up to 90 days to repay their loans. Some lenders provide installment loans that last as long as one year. Consumers have to conduct research to find the right installment lenders for them.
An interested person must complete an application form in the same manner that the payday loan requires. The person must have a stable job, a bank account and a source of income. The person will also have to sign a contract to receive the funds. The disbursement will go to the bank account that the consumer specifies, and the lender will withdraw the funds from the same account. Installment loans are a great option for a borrower who would like to take his or her time repaying advance so that it will not be a burden.
8. Car Title Advances
Online Title loans are special advances for people who own automobiles. They are short-term loans that have a lifespan of about 30 days. Title advances differ from payday loans in that the lenders base the loan amounts on the value of the borrower’s vehicle. Title advances are excellent for the borrowers because the lenders do not have to adhere to regulations. Borrowers who have new cars can receive cash advances for several thousand dollars. Borrowers can spend the proceeds on anything they like, and the lenders will never question such people about what they are doing with the monies.
Title advances are sometimes known as secured loans or collateral loans because the borrowers have to allow the lenders to place a lien on the vehicles. The lien allows the lenders to repossess the vehicles if the borrowers do not repay the advances. However, the lien is just security. It is not the lender’s intention to have to repossess anyone’s vehicle. Furthermore, title advance borrowers get to keep their vehicles during the entire life of the loan. They can use their vehicles every day to run errands, go back and forth to work, take a vacation and the like. The lenders are happy as long as the borrowers repay their advances.
To receive a title advance, an interested party must complete an application. The application process usually takes less than five minutes. The application will ask for information such as the requested loan amount, the borrower’s address and various details about the vehicle. The lender will want to know the year, make, model and mileage on the vehicle so that it can give the person a decent estimate on it.
The lender provides the prospective borrower with an estimate, and that person decides whether the estimate is acceptable. If the person decides that the estimate is acceptable, then he or she will visit a title lender to complete the transaction. The person will need to have the following items with him or her to complete the transaction:
- Identification such as driver’s license or passport
- Title to the vehicle
- Pay stubs
- List of references
Not all title lenders ask for a list of references, but the information is good to have just in case. Consumers need to prove their creditworthiness before a lender will take a chance on them sometimes. The title lender will review all the information that the consumer provides and then make a decision on the loan. If the lender decides to approve the loan, the borrower will have to sign a contract. The contract signature will come after someone inspects the vehicle and confirms that it is in running order and is in the condition that the owner specified.
The title lender will disburse the funds immediately after the consumer turns in the signed contract. Some lenders issue the funds in check form while other lenders use a debit car. Furthermore, some title lenders may disburse their funds via bank account. The borrower is expected to return the entire loan amount plus the proceeds on the specified date. Some title lenders may offer installment agreements that have longer repayment terms.
The lender will release the lien on the vehicle once the consumer repays the title loan. Quick paying consumers can take out loans later in their lifetimes if they ever come across an emergency in the future. The positive side to taking a title loan is the amount of cash. The negative side to the advance is the lien, but it really is not negative considering that the lender allows the borrowers to keep driving their cars.
What Is the Easiest Way of Borrowing Money?
Determining the easiest way of borrowing money depends on the consumer’s situation. Asking friends and family members is the easiest way of borrowing money for someone who does not want to get involved with contracts and such. Going through payday lenders is the easiest way for people who have steady jobs, bank accounts and meet the other requirements that payday lenders have. Requesting title advances is most likely the easiest way for a person who owns a vehicle. Title advances have so many positives to them that the auto owner cannot deny. Title lenders do not have the same strict employment requirements because their loans are secured by the title lien. They do want to see that their borrowers have an income, but they are not stiff about from where the income comes. These advances are probably the easiest to get for the average consumer who has a car, but does not necessarily have good credit.
Consumers can try any of the above-stated options to get the funds they need for emergencies. There is always a way to survive and a lender who will assist.