Low on cash and wondering if borrowing money is a good solution? That’s perfectly normal as every adult needs to borrow money at some point in their life to meet the expenses for higher education, marriage, new home, new business, etc. Luckily, many reliable lenders and financial products can help you borrow funds when you need them.
While the nitty-gritty of money borrowing may vary depending on the type of loan you are seeking, borrowing is essentially the act of taking money from someone provided that you will repay it in the future along with interest.
Factors You Should Consider Before Borrowing Money
However, there are certain factors you should consider before borrowing money:
- Loan tenure should ideally be short to avoid higher interest pay-out.
- EMI should be payable with the financial resources you possess.
- Look for lower rates on the money borrowed or transfer to a source offering lower rates keeping the foreclosure cost in mind.
- Tax benefits don't equate to saving money in the long run, so don't borrow money or prolong your loan repayment just to avail tax benefits.
- Borrow the minimum amount you need such that your EMI is less than 40% of your monthly income and your debt-to-income ratio is low.
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Best Ways to Borrow Money in India
5 Best ways to Borrow money online in India are:
- The Money Club Chit Fund Platform
A chit fund allows you to save as well as borrow money. With digitalization, chit funds have gone online, like at The Money Club, where a verified member can join a club from anywhere in India through a simple process. A group of people contribute monthly to the chit fund for a total duration equal to the number of members. The amount collected is given to the person who wins either by a lucky draw or an auction. The chit fund system gives high dividends at lower interest rates.
- Personal Loan
A personal loan can help you meet your current financial needs such as travel expenses, home improvement, emergency auto repairs, weddings etc. However, a personal loan typically cannot be used for higher education or a new house purchase. Although the tenure and interest can vary depending on the loan agreement terms, personal loans could be one of the cheapest money-borrowing options if your credit score is above 700.
- Peer-to-Peer Lending (P2P)
P2P is also known as social lending or crowdlending. P2P platforms connect individual investors that are willing to lend their own money to borrowers. There is no financial intermediary involved in borrowing or lending money through peer-to-peer platforms, making it a bit risky. However, the peer-to-peer lending platforms could be useful if a borrower cannot get approvals from standard financial intermediaries.
- Mortgage Based Borrowing
A mortgage loan is one where you can secure funds by pledging your property. The interest rates on mortgage loans may vary from 8% to 12%. You can borrow mortgage-based loans from banks by availing up to 60%-70% of the registered property value with a repayment tenure of up to 15 years. A home loan can be used to purchase a home, while a commercial property loan can purchase commercial space. On the other hand, a loan against property can be used to fund a wedding, overseas education, home renovation, etc.
- Credit Card
The fundamental concept of using a credit card is to borrow money for purchasing goods or services easily. The credit card company pays the merchant on your behalf provided that you settle the credit card bill on time. You can also get cash advance through credit cards, a short-term loan from a bank or an alternative lender. Cash advances on credit cards feature fast approval and quick funding, but on the flip side, they come with steep interest rates and fees.
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How to Borrow Money Online:
4 easy steps to borrow money online are:
- Define your requirements: What do you need to borrow the money for, how much and for how long?
- Check the options available: Which loan option fits your requirements the best?
- Evaluate each option: Consider the above-explained factors before borrowing money.
- Check the process: Apply for the loan based on the feasibility of the application process.
Why is The Money Club the Best Option for Borrowing Money?
The Money Club is India’s best AI-driven online chit fund platform which allows you to borrow money in times of need at a lower interest rate and with no paperwork. It is a secure and convenient way to borrow money in collaboration with verified peers. What’s more? You can get the money you need directly in your bank account while sitting at home.
The Money Club offers a gamified customer journey that allows you to proceed to higher amounts. The frequency of chits here can be as high as 1-3 days. So, get started and borrow the money that you’d need for an emergency, investment, business, or just savings.