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Borrowing Money from Good Sources

By Edited Jan 26, 2016 0 0

IOU
Borrowing money is something that should be approached very carefully and cautiously. It can be very dangerous and ruining if you are not careful. Take the best of precautions and you could still end up losing. The best rule of thumb is to never borrow money in the first place. If you feel you really need to, here are some methods for borrowing money, starting with the worse and most dangerous, leading to the better sources.

Shifty deals
Loan sharks. Don't ever borrow money from a loan shark. Although they do have a business to uphold and maintain, they also don't play by anybody's rules. They are probably connected to bad people, and bad things, and you don't want to be connected to something illegal.

Payday/title loans. Don't ever get a payday loan. The fees that come after it are horrendous. Your financial situation is not likely to improve substantially in just a couple of weeks, so don't even consider one of these if you know the money your borrowing isn't going to get you any more. (ie. lottery ticket)

Borrowing
Loans from family members. This should be avoided in most situations. Even if your family members or friends are willing to loan you money, it puts a strain on the relationship. If you can't pay it back, or if they turn out to need the money themselves, it could ruin the relationship and start something that didn't need to be started in the first place. Don't do it. Love and friendship is not worth money. Or the other way around.

401k loans – (loans from retirement plans). These loans should only be used in dire circumstances. When you borrow from your retirement account or savings, you not only have to pay interest on the loan meaning you lose money through taxes twice, but can't grow that money while you are paying it back.

Credit card loans. You can take a cash advance on your credit cards. It's slightly safer to do this because a credit card company is a legitimate business which specializes in loans. But be careful, interest rates and finance charges are very high, especially if you can't pay back on time. The money you owe could multiply very fast if you don't pay it off.

Loan Deal
Bank loans. Banks are made and used to loaning money. If you have decent credit, you can get a bank loan, signature loan, line of credit, auto loan, student loan, mortgage or one of many types of loans. It's safe and secure unless you know you can't pay, whereas you'd better not take one out, cause they can take everything from you.

Taking out loans is a dangerous business all by itself. Don't make it worse by taking unneeded risks and placing your money in danger. Choose to take a loan only when you really need it, and when you do, from legit and honest sources.

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