Most people will encounter a financial emergency at least once in their lives without having the cash on hand to cover the expense. The good news is that there are many different ways to borrow money fast.
Here are some of the best ways to get resources quickly.
Fastest Ways to Borrow Money
1. Credit card cash advance
Most credit cards will let you instantly withdraw cash at an ATM or bank — if you have credit available to tap. You’ll pay a transaction fee, plus interest, at a rate that is usually higher than the card’s regular annual percentage rate (APR). Cash advances are generally limited to an amount that’s less than your credit limit.
- You can receive a credit card cash advance as soon as you need it.
- There's no need to undergo a credit check since you've already been approved by simply having a credit card.
- There is a pre-set limit on how much you can get from a credit card cash advance.
- If you use cash advances often, you can end up paying a lot between transaction fees and the cash advance interest rate.
2. Payday loan
Payday loans are short-term loans, usually for an amount less than $1,000. Lenders typically charge a fixed fee based on the amount borrowed, and you have until your next payday to pay off the amount borrowed, plus the fee. Payday loans are one of the easier ways to borrow money fast but be wary of fees and high-interest rates. Make sure you know — and can afford to repay — the total loan balance before you agree to the terms.
- Payday loans are typically easily accessible and can provide money quickly after you complete the application process.
- Usually, payday loans have fewer requirements than traditional loans.
- Interest rates are usually higher than other loan options.
- Payday loans have short repayment terms. While most payday loans can be rolled over for a fee, you should pay your loan back as quickly as possible typically within two weeks.
3. Online personal loan
With an online loan, you can borrow a few hundred to several thousand dollars. Applying online makes it fast, and you can usually get the money within a day or two. Most online loans (and non-payday loans) are installment loans, which means you’ll make regular payments on a fixed schedule over the next few months or years.
- Online loans make it easy to compare offers from multiple lenders.
- The loan application process is usually quick and easy.
- Online lenders usually don't have local offices, so you'll need to handle interactions and payments online.
- Some online lenders may charge fees that make the total cost of the loan higher than it first appears.
4. Auto title/pawn loan
An auto title loan is a type of secured loan using your car title as collateral. If you own your car outright, you can drive away with cash after an appraisal. The lender keeps your car title until you repay the loan. If you don’t pay it back, you could lose your car. A pawn loan works similarly, but with a different object of value, like jewelry, put up as collateral.
- These loans are usually relatively easy to get as long as you own your vehicle .
- In most cases, these are short-term loans.
- You can lose your vehicle if you don't pay back the loan.
- Auto title loans tend to have high fees and interest rates.
Cheapest Ways to Borrow Money
5. Loan from friends and family
It might be difficult to ask, but borrowing money from a friend or family member can be one of the best options if you need money fast. If you want to take this route, it's a good idea to put the loan agreement in writing and establish a formal repayment plan. You can also discuss interest payments with the person you are borrowing from to set a fair, agreeable rate.
- It won’t negatively impact your credit score.
- It can be a quick and affordable option.
- You and your lender get to set the terms of the agreement, including the interest rate and repayment plan.
- Relationships with a friend or family member can be frayed if you're unable to repay the loan.
- You need to take it upon yourself to set up a legally binding agreement and consider the tax implications of the loan.
6. Paycheck advance from your employer
Your employer may be able to offer you a paycheck advance, which is when you receive your paycheck ahead of schedule. This is a type of loan that you would repay by deducting the loan amount from your next paycheck. Some employers charge a fee, cap the advance amount at a percentage of your regular paycheck, or limit how frequently you can make such a request. Also, if you leave a job or are laid off, you might have to repay outstanding debt before leaving.
- Advances are a way to get money fast without going through the loan application process.
- They are available to people with all types of credit.
- In most cases, paycheck advances can only provide small sums of money.
- Paycheck advances can only provide short-term benefits since you need to repay the loan with your next paycheck.
7. Peer-to-peer lender
Peer-to-peer lending platforms offer short-term personal loans online, with an individual investor loaning you the money instead of a financial institution. Loan amounts are typically $1,000 and higher. Your credit score will come into play here, and the process can take some time. After your application is approved, the loan is added to the platform. Once it is fully funded by investors, the money shows up in your bank account. APRs can be lower than traditional bank loans.
- Peer-to-peer lenders can offer lower interest rates to borrowers.
- For some borrowers, peer-to-peer lending can be more accessible than other loan options.
- It may not be available to all borrowers.
- According to Experian, “P2P lenders can be quicker than their traditional counterparts to submit overdue payments to collections agencies.”
8. Personal loan from bank or credit union
If you need to borrow less than $3,000, a personal loan from a credit union can be a good option. Federal credit unions have a cap of 18 percent APR (annual percentage rate) on most loans (short-term loans and state union rates can be higher), and not all credit unions consider your credit score and income when issuing personal loans. On the other hand, traditional banks generally place heavy emphasis on your credit, and often only offer loans for $2,000 or more.
- It can be a good option if you want flexibility in how you use the loan.
- Interest rates tend to be relatively low.
- Origination fees can be high.
- According to Wells Fargo, while debt consolidation loans may lower your monthly payment, they can also increase the total amount you repay over the life of your loan.
9. 401(k) loan
If you have contributed money to a 401(k) retirement plan, you may be able to borrow from it. The Internal Revenue Service (IRS) has set the following limits:
“The maximum amount a participant may borrow from his or her plan is 50% of his or her vested account balance or $50,000, whichever is less. An exception to this limit is if 50% of the vested account balance is less than $10,000: in such case, the participant may borrow up to $10,000. Plans are not required to include this exception.”
Like any loan, a 401(k) comes with an interest rate, which is usually a point or two above the prime rate. You typically repay the loan via paycheck deductions over a five-year term. Unlike other borrowing options, 401(k) loans aren’t reported to credit bureaus, so your credit score won’t be checked or impacted. If you don’t repay the loan, you’ll have to pay taxes on the amount, in addition to an early withdrawal penalty. Similarly, if you leave your job, the loan must be repaid and the timeframe can vary depending on when you took out the loan. Under a new tax rule, you have until the due date of your federal tax returns to complete repayment or roll it into an IRA or other eligible retirement plan.
- In most cases, you can avoid taxes and penalties that come with taking an early withdrawal from your 401(k).
- Any interest you pay on the loan will go back into your retirement account.
- In order to obtain a loan from your 401(k), you’ll work with the plan sponsor and you may also need to go through your employer's human resources department.
- If you leave your job, you will need to make arrangements to pay back the loan within a specific timeframe.
10. Life insurance loan
If you have a permanent life insurance policy, you may be able to borrow money in an emergency situation. When you do this, you are using your policy's cash value as collateral. There is no need to go through an application process in most cases.
- The company will not review your credit history.
- There is no need to go through an application process.
- The death benefit of the life insurance policy can be reduced if you do not repay the loan.
- Since it takes a while to accrue a life insurance's cash value, the amount that you can borrow may be low if your policy is still relatively new.
11. Home equity line of credit (HELOC)
This line of credit allows you to borrow against the equity you've built up in your home. It works similarly to a credit card in that you borrow money up to a certain limit and then pay it back with interest. You ask to borrow only as much as you need and pay interest only on what you’ve withdrawn.
- You may be able to borrow more, depending on the appraised value of your home.
- You only need to pay interest on the amount withdrawn from your account.
- Interest rates can be high, especially if you have a lower credit score.
- If you're unable to repay the loan, your creditor can foreclose the loan and/or seek a court judgment against you.
12. Personal line of credit
Personal lines of credit can be obtained for a wide range of funds, typically anywhere from $1,000 to $100,000. These loans accrue interest immediately after funds are withdrawn. There is typically no collateral, but minimal monthly payments are required, much like a credit card.
- There aren't as many restrictions as to what the loan can be used for, unlike auto and mortgage loans.
- According to Investopedia, lines of credit typically offer lower interest rates and more flexible repayment schedules than credit cards.
- You may face an origination fee and/or annual or monthly maintenance fees.
- Most personal lines of credit require a good credit score to qualify.
13. Alternative sources
Amrita Jayakumar at NerdWallet suggests checking out nonprofits and religious organizations in your community that may be able to help with emergency funds. Service members, veterans and their families are often eligible for short-term loans with lower APRs than other alternatives. State and federal programs can also help with certain bills.
- It may have lower fees.
- There are programs that can help with a variety of needs, including rental assistance, medical bills, and home energy bills.
- You may have to pay a funding fee.
- Not available to everyone.
Paying Back Borrowed Money
There are several ways to pay back loans. If you're working with a traditional lender, you may have repayment options from which to choose. Some smaller lenders may offer more affordable plans for the general population. There can also be even more leeway if you borrowed from a friend or family member.
Remember that you need to work your loan repayment into your monthly budget. For many people, this means factoring a certain payment into the total amount withdrawn from a checking account each month. However, you will need to consider loan payments and loan rates when reviewing your monthly budget.
In all cases, it's important to consider your overall financial goals before you take out a loan.
This content provided is for educational and informational purposes only and does not constitute financial or legal advice. RISE is not acting as a credit counseling or repair service, debt consolidation service, or credit services organization in providing this content. RISE makes no representation about the reliability or suitability of the information provided – any action you take based on this content is at your own risk.