In the past 18 months, tons of people have faced more financial adversity than they know how to deal with. Many of those people have been forced to borrow money. There is no shortage of personal loan opportunities available, but many of them are unfair to the point of being predatory. Do not get stuck in a predatory loan payment structure. Here are some ways to borrow money responsibly.
Don’t borrow money at all
This may seem counterintuitive, but the best way to protect yourself from debt is to exhaust every option before borrowing money. Have you talked to all your creditors to let them know what your situation is? No more than ever, businesses have plans in place to assist people facing financial hardship related to the COVID pandemic.
Try to get relief from your creditors before you decide to borrow money.
Friends and family
This is not an option for everyone, and it is a sensitive subject, but getting a zero-interest loan from a friend or a family member is certainly the cheapest way to borrow money from a financial perspective. No one wants to do this, but it could turn you around financially if you can fulfill your end of the bargain when it is time to pay the money back.
401k loan
This is a great option for someone who has the money available for borrowing. If you are under the age 59 ½, you will have to pay a 10% early withdrawal fee. Keep in mind that most personal loans will have a much higher interest rate than that. Additionally, if you have automatic contributions deducted from your paycheck, that can be used to pay off the loan.
Home equity loan
One of the best ways to get cash quickly may be home equity. It is considered a secured line of credit so the interest can easily be around 5%. You would need to contact your mortgage lender to explore this option.
Another option would be to take advantage of the current housing market and sell your house. You may get well over the market value. A perfect time to downsize is right now.
Payday lenders
Last and certainly least is a payday lender. This is not recommended, but they are out there. Thousands of people take out these loans and regret it for a long time. Interest rates can be 50% to 500% with exorbitant fees and intentionally confusing payment structures. These lenders are aggressive in every way and should be avoided at all costs.
If you have already made the mistake of taking out a payday loan and are falling behind on payments, you need help from an experienced attorney. Elias Dsouza has been fighting predatory lenders for over a decade and is here to help you get back on the path to financial freedom. Contact Elias Dsouza at Dsouza and Strachan Law Group today for a free consultation.