Types of Loans for Emergency Cash
Payday Loans (also called Cash Advance Loans)
These are amongst the worst loans you can get. Here's why....
Home Equity Line of Credit (HELOC)
A good way to borrow if you're careful. Read more to find out if it's right for you.
Home Equity Loans (HEL)
A good way to borrow if you're careful. Read more about the tradeoffs and see what to watch out for.
Person-to-person (P2P) Loans
A new way to borrow with help from a community of lenders. Get a better interest rate borrowing from real people rather than big institutions.
Retirement Account Loans
You've saved some money in your retirement account (IRA, or 401(k))- in an emergency, can you tap into it? More importantly, SHOULD you do it?
Credit Card Debt
Credit card interest rates are typically fairly high. Being in credit card debt is something you should avoid. Read these tips on avoiding and on getting out of credit card debt.
-------------------------------
What I would do (and this is just me- your situation may vary):
- If you own a home, and have built up equity, a home equity loan or home equity line of credit are good choices with decent rates. Just be sure you can pay back the loan or you ma lose your home.
- The next best choices in my opinion would be P2P Loans. The interest rates will probably be inbetween the home equity loans and credit card rates, though it will depend on your credit rating and situation.
- Borrowing by using your credit card comes in 4th place. Rates can be high, usually 17% to 29%, depending on the deal you have. If you have a better rate, then this option might come in as a better choice, but, credit card companies have a sneaky way of jacking up the rates once you're hooked so be cautious.
- Borrowing from your retirement accounts would come in third place in my book. I have actually done this before, and it worked out fine. But, you have to be very careful about the rules on paying back.
- At the bottom of the list are Payday loans, which are the worst option of all.