Adulting is not all freedom and independence, it’s also expenses and loans. 

 

At some point in your life, you may have to take out a loan to cover some costly expenses ranging from student loans and mortgages to a much-needed vacation across the globe, or emergency medical bills. 

On that note, here’s a look at the best ways to borrow money in the era of cheap credit;

Where Is The Best Place To Go To For Your Loans?

For every reason you have to borrow, there’s a long list of financing options to help you, from traditional financial institutions like credit unions, banks, and financing companies, to more contemporary alternatives like peer-to-peer lending.

Banks have been the go-to for many individuals looking to borrow some money for a long time, however, everyday Americans now have a ton of personal loan options they can choose from as opposed to taking loans from banks thanks to the rise of fintech with lending capabilities and flexible payment plans.

If you need to take out money for emergency auto repairs or finally get on with your home’s renovation, a personal loan might be the intelligent choice. However, it’s worth noting that you cannot take out a personal loan to fund your college tuition or buy a new home. 

Many people find the process of getting loans from their bank relatively easy, especially if they have an account and an established customer relationship. There’s also personnel ready to assist with whatever questions you may have or the ensuing paperwork.

How Are Credit Unions Any Different?

Credit unions are cooperative financial institutions dedicated to serving their members by offering competitive interest rates. 

Think of them as “non-profit banks”. They offer loans at subsidized rates to make loaning services more accessible to everyday people. They also make lending application fees and transaction fees ridiculously cheap and in some cases non-existent.

Most federal credit unions set an annual percentage rate cap of 18% for most loans while additionally, these institutions set relatively less rigid lending processes because of their focus on the community.

However, some credit unions do not provide loan products as extensive as other bigger banks. You may also need to join and open an account with a local credit union before becoming eligible to borrow money.

When Do You Use Online Lending Services?

Digitalization has seen online lenders become more popular with the pretty quick and straightforward application processes. Depending on the borrower and the platform, they offer personal loans at APRs ranging from 3% to 36%.

Peer-to-peer lending, otherwise called crowdlending, is a financing method where you can borrow money without banks or brokers serving as middlemen. Although it eliminates the institutional intermediary, the process takes on more risk, effort, and time. 

You can access loans from an individual investor through an online peer-to-peer platform. When using these platforms, you have to upload a profile, with which the investor decides whether or not they are willing to take a risk and loan you the money. 

Unlike credit unions or banks, finance companies do not accept deposits or provide extra financial services. Instead, they simply give loans to individuals who need them for big-ticket purchases like a car, furniture, or major appliances. Others may choose an area of specialty, such as helping customers cover medical or healthcare expenses. However, many finance companies give out short-term loans.

Whichever lending option you choose, before committing, you must ask yourself some questions before making that decision to borrow.

 

For example, do I have the financial resources to make monthly payments? What’s my budget to manage my finances moving forward? Am I ready to pledge my home or other assets as collateral?

After answering these questions, you should know what facility is the best option for you.