There are many reasons why you might need to take a loan. You might borrow money when it’s profitable i.e. you earn more with the borrowed funds than what you pay as interest. Also, you might borrow money because you do not have any other option. Borrowing money is not an easy process as you can end up using up all your money on high bank charges and interest rates. The following are some effective ways to borrow money:
How to Find the Cheapest Way to Borrow Money
When looking at your options, you should look at the amount that you will have to pay once the charges and interests are factored in. You should also look at the reasons for borrowing money and the methods that are available for you. Some methods include;
- Zero-Percent Credit Cards; these cards have a teaser rate incentive with a favorable grace period of 6 to 18 months. It is ideal for quick short term loans because of the card’s zero APR once this period runs out, interest rates jump as high as 25%.
- Mortgages; for a first mortgage i.e. for buying a house, you get a fixed amount (fixed rate) with a balanced monthly payment plan until the amount is completely paid off. You might need a second mortgage for house repairs; it also works as the first mortgage plus you get a line of credit. A certain amount of money is approved and you can draw on it as required. The interest is variable but you should never use this type of loan on a lifestyle you can’t support.
- 401 (k) Loans; you can use this type of loan if you have a retirement plan. Limits for this loan type vary but you can take loans up to half of your account balance. The advantage about this loan is you pay interest to yourself. If you quit or get laid off, the full amount must be paid within sixty days.
- You can also borrow from family or friends; it can be beneficial as there are no interest rates and hidden charges but in case of any problems, you can put a strain on your relationship.
Do your own Research
If you do smart research, you will easily meet your financial goals with the borrowed funds. Fail to do proper research and you could end with a huge financial burden than you bargained for. No matter why you need the funds or what your financial needs are, carrying out proper research to find as much as you can about your options to help you make an informed decision is crucial.
