Have you had a problem and need money URGENTLY? See how to borrow money without getting into debt with the help of 8 tips.
Have you ever gone through that difficult time where you have several bills in hand, but unfortunately the money is not going to be enough to pay them all?
In this moment of agony, several ideas come to mind, such as earning extra income, selling household items, saving on other bills, and even borrowing money.
Asking for money can be complicated for some people, but it is a great solution for dealing with emergencies for you and your family.
But don’t worry: even though it’s a good option, it doesn’t mean you should run to your first friend and ask for whatever amount you want.
Here are some tips on how to ask for corporate money and when to do it.
What is a loan?
One approach to raising money is through a loan, which might be from a bank, friend, relative, or other financial organization.
You agree to have the bank use the borrowed funds only as permitted by you until you settle this responsibility when you borrow money from the bank. The bank will impose interest in order to make up for the brief lack of money access due to this reason.
What You Need to Know Before Borrowing Money
Well, in case of any emergency needs for cash, remember it shall make you reflect and remember that this amount is the new debt you have to pay with big interest or no interest at all at the end.
So, before you rush to the first option that appears on Google or in your family group, you need to know:
1 – Conditions
It is necessary to analyze the loan conditions very carefully, even if it is done informally with a friend or family member: see the number of installments, whether their amounts fit into your monthly budget, whether there are interest and fines, etc.
2 – Risks
All types of borrowed money have some risk, such as a late payment that generates fines and interest or that can disrupt the financial life of the person who lent it.
3 – Objective
The reason for the loan can change everything: don’t borrow money to go to a party or buy new clothes, as this will make the people closest to you lose trust and motivation to lend to you, even if an emergency arises.
4 – Are there other alternatives?
Look for other ways to earn money before borrowing, such as earning extra income, using your emergency fund, using money you had saved…
Only ask for money if you really need it and when there are no other options.
5 – Be careful with the number of installments and deadlines
You must be aware that the more years it takes you to pay back, the more expensive the loan will be, and making more installments means a higher cost of the loan, as banks often charge higher interest rates under such circumstances if you want a bank loan.
6 – Ease can be costly
Options that seem very easy and quick can have some catches, such as having much higher and abusive interest rates.
In fact, learn about the advantages and disadvantages of requesting a loan for those with bad credit that is released immediately.
When is borrowing money a good option?
As we’ve previously discussed, even for those who truly need the money, asking for it may be a sensitive issue.
For your comfort, we’ve included a list of the ideal times to request this amount below:
- When you need to clear your name urgently
- To pay off debts that are blocking services, such as electricity, water, telephone, internet
- To take advantage of a great debt agreement renegotiation and get the deal right
- When a financial emergency occurs and you don’t have an emergency fund yet
- When you have already earned extra income, but have not yet received the full amount for an emergency
- When the only money options available are an overdraft or a credit card revolving credit: these are the most expensive lines of credit on the market, where interest rates are even abusive
Ways to borrow money
Borrowing money can be a kind of salvation in difficult times, such as when an accident occurs, or a health problem and medication is needed, a dismissal, or when an electrical appliance breaks…
Anyway, there are hundreds of reasons, but there are also several ways to get the money:
1 – Borrow money from a friend or family member
One of the first options for many people is to borrow money directly from close and trusted people, such as family and friends.
This type of “loan” ends up being much more economical, after all, your friends and family will hardly charge interest like banks do.
However, if you do borrow money in that sense, then make sure you have a well-organized financial plan and that you are able to pay the person back who helped you with your full amount.
There are several examples of people who have given money to someone, but never got it back, and that led them into debt, ruining their credit.
You wouldn’t want this to happen to a friend or your family member, would you? So, before you ask, think about what you want to say and plan it out.
2 – Bank loan
There are dozens of bank loans offered by both traditional banks, as well as digital banks and fintechs.
When choosing this type of borrowed money, you have to be prepared to go through a credit analysis and also pay interest, which can be low or even abusive.
That’s why it’s very important to understand what types of bank loans exist, compare interest rates between banks, and also evaluate other possibilities, such as renegotiation.
These are the main types of bank loans to borrow money:
- Personal loan
- Loan with collateral
- Payroll loan
3 – Payroll loan
The payroll loan deserves to have its own space in this matter of borrowing money because despite being a bank loan, it has great interest rates.
Additionally, this kind of loan is taken out of your paycheck straight, which may be a huge benefit for those who struggle to remember to make their installment payments.
Either way, because the loan amount will be taken out of your paycheck each month, you should consider your options carefully before taking out a payroll loan.
4 – Borrow money from a loan shark
When emergencies occur, it is very common for people to go for the solution that seems to be the most practical and quickest way to borrow money, but making this choice without thinking can cause even more headaches.
Despite being an illegal way of asking for money and not authorized by the Central Bank, many people still seek to take out loans with loan sharks, who are people who lend money “outside” financial institutions, but who still charge very high interest rates.
As loan sharks do not have any rules regarding loans, do not perform credit analysis, or ask for any type of proof of income to release the amount, this option ends up being more accessible than loans from banks, however, it can generate problems, such as undue and violent charges, threats and even theft of goods.
Therefore, even if you have this opportunity, avoid asking a loan shark for money and look for other options.
5 – Advance payment of 13th salary or FGTS withdrawal
Another way to ask banks for money is to use credit lines, which are advances on amounts that are already guaranteed by the consumer, such as the receipt of the thirteenth salary or the FGTS anniversary withdrawal.
Both are types of loans, but unlike other options, in these cases, you already have the right to a certain amount and then choose to advance it, but of course, under the payment of interest.
Since you will receive the money at some point, banks usually reduce the interest for you to make the advance.
Loan for people with bad credit: is it possible to get one?
Yes, it is possible to get a loan even if your credit score is bad and even for MEIs with a negative credit rating, however, this type of loan needs to be carefully considered, as the interest rates for people with a negative credit rating are much higher.
As companies perform a credit analysis to release the loan, they evaluate your financial history with banks, your current income, whether you have outstanding debts, and many other factors.
Therefore, if you have a negative credit rating, banks understand that there is a possibility that you may take out a loan but not be able to pay the installments on this loan in the future. And so, to compensate for this risk that the bank is taking, they increase your interest rate.
In any case, there are ways for people with bad credit to borrow money from banks and still ensure that the interest rates are not abusive. To do this, go to your trusted bank and ask about the rates for payroll loans and loans secured by real estate or cars, which are credit options with reduced rates and are accessible to workers with bad credit.
8 Tips to Avoid Getting Into Debt When Borrowing Money
- Make a plan for your finances
- Always update your planning
- See if the installments fit your budget
- Set reminders to pay
- Do not accumulate installments and loans
- Compare the options
- Borrowing money to pay off debt can work, but consider it carefully.
- Check your goal
See details below:
1 – Make a plan for your finances
Make a financial plan and write down your fixed and variable expenses, as well as any outstanding debts. In this same plan, also write down your current income.
2 – Always update your planning
Always have this financial control and update it frequently: weekly, fortnightly, or monthly.
3 – See if the installments fit your budget
Prior to taking out a bank loan or borrowing money, think about your strategy and your ability to stick to a new financial obligation. After all, you will eventually have to repay the money you borrow. Check to see whether this sum is within your means.
4 – Set reminders to pay
If you borrow money from a friend or family member, make sure to record the entire amount borrowed, the installment amount, and the payment deadline. Make sure you remember to pay by setting reminders!
5 – Do not accumulate installments and loans
If you are already paying a large installment, pay off this debt first, and only then take on another. By accumulating installments, you end up with a gigantic snowball, which will be more difficult to pay off in the future.
6 – Compare the options
When borrowing money from the bank, always carefully analyze the loan options, and the interest rates available to you and run simulations until you find a comfortable amount for your pocket.
7 – Borrowing money to pay off debts can work, but consider it carefully
If your idea is to borrow money to renegotiate and pay off a debt, don’t forget to check if you are getting a good deal and really exchanging an expensive debt for a cheaper one. Remember that you will still have debt, but you can reduce it through lower interest rates.
8 – Check your goal
Never borrow money to make unnecessary and desirable purchases, that is, to buy leisure items that could be avoided.
