Borrowing Money Fast And Inexpensive
By: Ian Golightly MBA
If you’re reading this blog post, I could probably assume that you need some money as soon as possible. Also, if I’m guessing correctly, you’re trying to find a way not to pay as much back (aka interest), then good because this blog post is for you.
You’re just in luck with finding the best places to borrow money.
Did you ever think you may have all the money you needed and didn’t realize it? You may have that pile of cash in a savings account, under the bed, a safe, or even an emergency account.
Being in real estate, one of the fees that many homebuyers stress about is the closing costs. I’ve seen when closing costs have gone up to $10,000, and suddenly, panic starts to set it when the homebuyers are approved for the loan, and they need to bring the $10,000 to close. In these few situations of panic mode, most of the time, the home buyers find out they have a significant amount of money stashed away in their emergency funds.
There was a situation when one home buyer didn’t want to touch their emergency fund unless a real emergency occurred. Not being able to close on your home because of negligence in making sure the transaction can close can come with ramifications. In my books, that’s an emergency to decide to use the emergency fund.
I did explain that they have an option to take a loan out in case of an emergency did come up before they could rebuild their emergency fund. Most of the clients I’ve worked with are very well off and can easily replace $10,000 for an emergency fund in just a few months.
If your money is hanging out in a savings account and not passively working for you, you might have a solution. People work hard for their money, so I can understand why they want to hold on to it as long as possible. Most of all, if you can avoid high-interest rates from credit card debt, then you’re better off using your personal capital. My advice is to see a professional financial advisor to help you weigh the pro and cons if you’re not willing to budge to use your own capital.
I’ve had friends in the past that talked about borrowing from their retirement fund. In my opinion, it doesn’t make any sense to ‘borrow’ money from your retirement fund. You may need to talk to a professional accountant. Still, your borrowed funds may be taxable, and they may come with a penalty too. Since you’d be borrowing from yourself, it may be easy to get sidetracked and not pay the money back. Then you’ll be setting yourself up for possible failure in your future.
Your retirement fund is supposed to serve one purpose: to have you financially set when you retire.
2. People That you Know (Family & Friends)
Borrowing from people you know can be a touchy subject, and most people try to shy away from asking. I completely understand, but before you turn down the idea, you should think about the benefits first.
I’m going to assume that the money you would ask for is something that you can make on-time payments on and pay the money back in full at some point. If this is the case, it can be a win-win situation. In real estate investing, I like to call this idea ‘creative funding.’
Suppose you can find someone to give you a yes. In that case, you can pay 50% less interest rate than a conventional credit card. In return, the person lending can make a little bit of interest if they have cash they are just sitting on. I would call this a win-win for both parties. If you are serious about doing this method, have a contract with a written repayment plan and repayment schedule for the lender. I would also show your personal income statement to show that you have the means to pay off the debt.
Showing your earnings can feel a little bit too personal. But also understand that someone is putting trust in you by lending their private money to you. Also, showing them your income will show them how serious you are as well. Instead of going to the bank, you are receiving funds from someone you know. It doesn’t mean you can’t treat the situation as if you were going to the bank.
3. Credit cards and their promotions
At the beginning of the post, I discussed that it wasn’t wise to use credit cards. To clear the air, I meant that it wasn’t wise to use credit cards that have high-interest rates. Many credit card companies offer new cardholders no interest for up to 18 months. Some even provide no-interest debt rollovers if you’re rolling it in from a different credit card servicer. You can also take advantage of moving the debt in a credit card to receive points too!
If you can not pay the debt in the 18 months grace period, you may have the opportunity to sign up with another card servicer and roll the debt again.
4. Personal Loans
Finally, if none of the ideas listed above jive with what you are looking for, you have the option to go with a peer-to-peer lender. If you decide to do it online, the process is usually seamless, fast, and sometimes cheaper than credit cards.
Here are a few for you to check out:
- Lending Club
Overall, if you want to do something and you don’t have the funds on hand to do it currently, the universe is most likely trying to tell you it is a sign. That’s just me being superstitious, but I wouldn’t completely dismiss that it may not be the right time. If you really need the funds quickly and very cheaply, these tactics will help. I’ve seen these strategies work with real estate investors when money needed to be funded in a very short timeframe.