Whether it is buying a house, financing your child’s education, or a wedding, you need money all the time. However, there may be times when your funds might fall short of your total expenditure. Under such a situation, it would be worthwhile to borrow money from a credible source.
At the same time, you also have to factor in the resources you have at your disposal to avoid falling into a debt trap. So as not to throw caution to the wind, you have to have an idea of your current budget, the period within which you have to repay the amount, and the interest rate applicable to the Loan. If you can repay, it’s best to borrow cash for the shortest time possible.
Because of the high-interest rates that apply when availing a finance loan for a longer length of time, ideally, the amount paid off should be less than half your monthly income.
Considering the factors mentioned above and the purpose for which you need the instant money, you can opt for multiple ways:
- Personal Loan
Personal loans can help you meet numerous expenditures ranging from home improvement and repair expenses to weddings. Although not applicable to higher education or home loans, this loan form can be a cost-effective and quick option to acquire money, depending on your bank’s credit score.
2· Credit Card
The option of using a credit card is perfect for getting instant cash whenever you require it and wherever you are. It is a very feasible and popular way to purchase goods and services at your convenience. Having a credit card is also an effective way of obtaining cash, made possible as a short-term loan secured from a bank or other source. However, it also has its downside in that it charges high-interest rates.
- Borrowing from the employer
Although borrowing from banks and financial institutions is the most prevalent form of securing a loan, asking your employer for funds is also viable. Besides helping you borrow instant cash, the employer can lend the money against your salary. The employer can take the borrowed amount from your salary over three months to two years.
4.· Loan against property
Borrowing a loan against property has the benefit of securing more significant amounts, for instance, home loans, at lower rates. Considering the market rate of your property, whether it be residential or commercial, banks can lend you money ranging from several lakhs to crores over two to fifteen years. Moreover, the banks are known to extend cash about sixty-five percent of the property value provided it’s insured.
5.· Loan against securities
Securities such as mutual funds, insurance policies, and shares, among others, can be used to secure a loan, much like property. For example, you can get a loan for up to 50% of the value of your mutual funds and stocks. On the other hand, banks provide the option of taking out loans against fixed deposits. The proportion can be as high as 75% of the total value in the second situation.
Despite these ways being widely popular, the list is not comprehensive. Other prevalent methods include obtaining loans against gold, top-up loans, and peer-to-peer lending. Under the best circumstances, it would be worthwhile to borrow instant cash in the form of a gift loan from friends and relatives.