Generally, paying unexpected expenses from an emergency fund is better than borrowing money. But, occasionally, life throws a curveball, demanding additional resources.

Don’t forget that not all borrowing is created equal, with some having bigger financial drawbacks than others. Whether you’re seeking for the greatest deal or need money fast, carefully consider your options and the risks.

The cheapest ways to borrow money

However, certain loans are more affordable than others, especially if you have excellent or exceptional credit (a FICO of 690 or higher). Your best choices are:

a. Personal loan from a bank

Banks and credit unions often provide personal loans at the lowest APRs (total cost of borrowing). Lengths of loans range from a few hundred dollars to $50,000. If you already use a bank, you may be eligible for a further APR decrease. Also, some banks provide perks like flexible payment options to help you get through tough financial times.

A bank loan can be difficult to obtain when you have credit isn’t outstanding. Some banks allow the applicant to be pre-qualified for loans to determine the interest rate and duration. This is becoming more common among lenders that are online.

Although a guide to bankruptcy may be the best option for dealing with crippling debt, it’s also one of the most detrimental items to include in the credit report.

This is why it can be extremely difficult to obtain another loan after having declared bankruptcy. Keep in mind that there are lenders who will deal with those with bad credit — for instance, you may be eligible for a personal loan after bankruptcy with certain lenders, based on the quality of your credit.

With bad credit, credit unions may offer better rates than banks. Loan officers may look at your whole financial picture rather than simply your credit score. But first, join a credit union.

2. APR credit card

A 0% APR credit card may be one of the cheapest ways to borrow money if paid off within the offer period. Generally, you need good or excellent credit to qualify.

Depending on the card, you may be exempt from paying interest for the first 15 to 21 months. Consider this scenario: you use a 0% APR credit card for a 15-month unanticipated need, such a medical bill or vehicle repair, and pay it off nine months later. You’ll have paid no interest on the transaction.

3. Buy now, pay later

“Buy now, pay later” options allow you to buy now and pay later without paying interest or fees. Shops online and in-store offer these payment arrangements. Although Afterpay does not charge interest, it may impose a late payment fee. Affirm may charge interest depending on the purchase amount and shop.

Purchasing now and paying later may be a cost-effective way to borrow money for unforeseen expenses. Because it is so easy to get, it may lead to overspending.

4. 401(k) loan

Retirement loans let you borrow from your retirement funds. An IRA loan is tax-free and penalty-free.

They also offer some of the best pricing available. A 401(k) loan’s interest rate is frequently equal to the prime rate plus one percentage point, making it cheaper than a credit card. Interest is also reinvested in your retirement account.

Also, if you miss a payment, your credit score won’t suffer since defaulted 401(k) loans aren’t reported to credit bureaus. What are the 401(k) loan drawbacks? You’re reducing the amount of your retirement fund and its growth in a tax-favored account.

5. Credit line

Personal lines of credit are given by a few banks and credit unions and work like loans and credit cards. Approval or denial of your application depends on your credit history, income, and prior commitments. Unlike a credit card, you may withdraw just what you need and pay interest on the amount utilized.

This helps borrowers who are uncertain of their needs. Borrowers with outstanding or exceptional credit are more likely to get the best prices.

Quickest ways to borrow money

Getting money is riskier or more costly the easier it is. Having said that, your best alternatives are:

Getting a personal loan online

Unlike traditional lenders like banks or credit unions, internet lenders make the application and funding procedure simple and fast. Others need a branch visit to complete the transaction.

For the best APR, you should pre-qualify and evaluate lenders, based on factors including credit score and income. Pre-qualification is a soft credit check that allows you to shop around without affecting your score. Online lenders also service a larger clientele than banks, including those with fair and bad credit.

2. Loan requests

Cash advance applications allow small advances on your pay, sometimes instantly, although you may be charged a fee for faster processing. Financing usually takes one to three days.

There is usually a monthly fee or an optional tip. If you lend between $100 and $500, Earnin does not charge interest, but expects a tip of up to $14.

3. Card cash advance

Credit card cash advances are also possible. Preferably “buy” cash using your credit card. Cash advances are usually just a few hundred dollars, but they’re easy to acquire. With a PIN, you may withdraw cash from any ATM. If you don’t have a PIN, take your card and ID to a bank that accepts your card’s payment network, such as Mastercard or Visa.

This is a fast way to obtain money, but it is costly. Cash advance costs, ATM or bank fees, and interest rates that are higher than the rate paid on purchases are likely to be encountered.

Loaning money to family or friends

Someone in your network may be prepared to lend you money if you need it. You’ll avoid the lengthy application and approval processes required by other lenders. This is ideal for those who need money fast or are worried about their credit score.

But be cautious when asking a relative or acquaintance for a loan. Loans between friends and relatives may generate issues. As a consequence, notarize all mutually agreed-upon agreements.

5. Pawn Shop loans

A pawnshop loan, like a bank loan, needs collateral. Consider jewelry, antiques, electronics, and even weapons. After you bring the item in, the pawnshop appraises its value, condition, and resale potential.

Accepting the amount gets you cash and a pawn ticket. You can get it back after a refund. If you don’t pay back the loan within 30 days, the pawnshop keeps it.

A pawnshop loan is a quick and easy way to get money. APRs of up to 200 percent are common at pawn shops due to storage, appraisal, and insurance fees.

Non-borrowing options

1. Quick loans

Payday loans are small, short-term loans that are repaid with your next income. However, payday loans are pricey and should only be utilized as a last resort. A two-week loan may cost up to $15 every $100 borrowed, amounting to a 391 percent annual percentage rate.

Most borrowers end up paying more in fees than they received in credit, according to a federal Consumer Financial Protection Bureau study.

2. High-interest installment loans

Installment loans with high interest rates are repaid over weeks or months at a rate of above 36%, which most consumer advocates deem acceptable.

A $1,000 loan with a six-month term and a 60% APR would cost $182 in interest and need a $197 monthly payment. A 20% APR loan would cost $59 in interest. Avoid high-interest installment loans, since their high APRs may make repayment difficult.

Repentance

Once you’ve decided how to borrow the money, start preparing how to return it. To avoid long-term or continuous debt after a financial setback.

Don’t know where to start? The 50/30/20 rule is an easy-to-follow system that accounts for your necessary living expenditures, debt obligations, and savings. Managing your finances well and saving for emergencies might help you avoid needing to borrow money in the future.