One of the most common questions Americans ask is “How to borrow money online?” Even if there are many online and offline ways to get the necessary loan amount, they don’t work the same and have different drawbacks. Some options can be too costly, and for others, it’s hard to get approved without an excellent credit score. Every borrower should compare all the ways to borrow money to choose the most suitable one for their needs.
How Can I Borrow Money Online? Top 7 Ways
If you need to borrow extra funds, you can choose from multiple online lenders who may want to help you. Consider the most popular online loan options, allowing you to get the money you need.
1. Personal Loan
A personal loan is a vast category of loans that can be used for various purposes, such as car repairs, home improvement, childcare costs, medical expenses, etc. A personal loan application is available through a bank, credit union, or an online lender. These loans allow you to borrow up to $50,000 and, in several cases, even up to $100,000.
You obtain your personal loan amount in one lump sum directly to your bank account and then need to return it with interest rates of 6% to 36% APR within several months. Try to make each monthly payment on time to avoid late payment fees and hurting your credit score.
When you apply for a personal loan, be prepared for a hard credit check. Most lenders make an approval decision based on your credit report. Therefore, getting a personal loan is challenging for bad credit borrowers. While it is easier to obtain loans from credit unions, you should be a member of this financial institution.
2. Cash Advance App
Cash advance apps are an excellent way to borrow money quickly with bad credit. They usually allow borrowers to get up to $500 and repay the money by their next paycheck. Unlike many other financing options, you can apply through a borrow money app with no extra fees. In several apps, you may be only asked to pay for membership. Lenders make their approval decisions almost instantly and deposit the money within one business day.
3. Payday Loan
Payday loans are short-term loans taken by the borrower’s next paycheck. The amount you can borrow with a payday loan usually doesn’t exceed $1,000.The fast and simple loan application process and same-day approval decisions make payday loans a convenient way to get money online. For example, you can obtain a $800 payday loan with 15M Finance within one business day to cover minor emergencies, such as unexpected medical bills, car or home repairs, etc.
The main difficulty people face in borrowing money from payday lenders is loan repayment. As these small loans don’t require a hard credit check and are available even for poor credit, they come with a higher interest rate than loans from banks and credit unions. Their interest charges can reach 400% APR (annual percentage rate), which makes paying off the debt unaffordable for many borrowers.
4. 0% APR Credit Card
A 0% APR credit card can be one of the cheapest ways to borrow money if you repay the credit card balances within the set period. While traditional cash advances often lead to credit card debt due to their high interest rates, 0% APR options allow you to avoid these additional charges. Making on-time payments can help you not only repay the loan without additional charges. However, you need a good credit score to qualify for this credit card.
5. Auto Title Loan
Title loans (auto title loans, car title loans) are secured loans where your vehicle serves as collateral. A car title loan allows you to borrow money even with a bad credit score. It is a safer loan option for lenders as they can seize your auto if you don’t repay the debt. At the same time, these loans are considered risky for borrowers, as they risk losing their car.
6. Home Equity Loan
Home equity loans help people borrow money against their home’s value. If approved, a lender will provide you with one lump-sum payment that you need to repay within 20 to 30 years.
At home equity loans, your property serves as collateral. While you risk losing both your money and home, a lender can approve your loan application despite your bad credit history. Furthermore, you can get a lower interest rate than in other loans.
7. 401(k) Loan
A 401(k) loan allows you to borrow money from your retirement funds instead of a lender. This is a cheap and quick way to borrow money for bad credit borrowers. 401 (k) loans usually come with low interest rates, even for people with low credit scores. This borrowing option doesn’t require any taxes and penalties if you return the money within set loan terms.
While your missed loan payments are not reported to the three major credit bureaus (Equifax, Experian, and TransUnion) and don’t hurt your credit, remember that you borrow money from your future self.
8. Buy Now, Pay Later
“Buy now, pay later” (BNPL) loans are one of the best options for people who want to borrow money without a hard credit check. This type of loan allows you to make a purchase and pay for it later in several equal payments. As a rule, BNPLs come without interest and fees.
9. Personal Line of Credit
Personal lines of credit can be taken from banks and credit unions and work similarly to loans and credit cards. Like any lender, the providers consider your credit score and income to approve your application for a personal line of credit. Like a credit card, this borrowing option allows you to draw only the necessary amount and pay an interest rate only on the sum you use.
How to apply for a loan online?
To get loan products without visiting a bank, you just need to shop around to find the best personal loans and submit an online application form on the lender’s website. In many cases, your loan may be approved within 15 minutes. If your request is accepted, you will get a loan offer and receive the money directly into your bank account the next business day.
Who qualifies to borrow from lenders online?
To borrow money from online financial institutions, you need to be a U.S. citizen of at least 18 years old with a steady income and an active bank account. You also need a phone number and email address to communicate with a lender. Many providers have minimum credit score requirements, but you can still find loans that require no hard credit checks.
What are alternatives to borrowing from loans or credit cards?
While the cost of borrowing through many online loan types and credit cards is often too high, you can consider pawn shop loans and borrowing from your friends or family. Family loans are generally the cheapest and safest option for smaller and larger loan amounts. Pawn shop loans also help you get money fast but come with the risk of losing collateral.