The Best Ways to Borrow Money

It’s not always possible to cover an expense — whether planned or unexpected — with cash you have on hand.

Among employed Americans, 8% say they don’t regularly save any money from their paychecks, according to a NerdWallet survey conducted online in March 2026 by The Harris Poll.

If you don’t have the cash upfront, there are several options for borrowing — each with its own pros and cons. The right option for you depends on various factors, including how much you need to borrow, when you need the money and your creditworthiness.

Let’s explore the different ways to borrow money and when each option is best.

Breaking down the best ways to borrow money

The categories below highlight the best borrowing methods for various situations — whether you need quick cash, want to avoid paying interest or you have another goal in mind.

Scan these lists for borrowing options by category, then keep reading below to learn more about each borrowing type.

Personal loan from an online lender

Online lenders boast convenience and speed compared to traditional lenders like banks or credit unions. Many online lenders can fund personal loans as quickly as the same day you’re approved or the following day.

Online lenders often cater to a wide variety of consumers, including those with bad credit (scores below 630). If your credit score is low, your loan may have an annual percentage rate (APR) on the higher end of the lender’s range — which typically tops out at 36%.

The average APR for borrowers with bad credit who pre-qualified with NerdWallet over the past 30 days was 34.96%. By comparison, borrowers with good credit (scores of 690 or higher) received an average APR of 19.57%.

Loan amounts typically range from $1,000 to $50,000 or more, and repayment terms often range from two to seven years.

» NEXT STEP: Compare the best online loans

Personal loan from a bank

Banks tend to offer lower APRs for personal loans than online lenders. Some provide rate discounts to their existing customers. If you don’t have good credit, however, it may be hard to get approved through a bank.

Loan amounts typically range from $1,000 to $50,000 or more with repayment terms ranging from two to seven years.

» NEXT STEP: Compare the best bank loans

Personal loan from a credit union

Credit unions are more likely than banks to approve loan applicants with bad credit. Loan officers may consider your overall financial picture, instead of relying heavily on your creditworthiness.

If you need to borrow a small amount, credit unions are your best bet at getting a personal loan under $1,000.

Also, federal credit unions cap rates at 18%, making them some of the best options for a personal loan with a low APR. But you’ll need to become a member before getting a loan from a credit union.

» NEXT STEP: Compare the best credit union loans

Cash advance app

If the amount of money you need is a few hundred dollars or less, cash advance apps provide small advances on your paycheck with no hard credit inquiry. The borrowed amount is often automatically deducted from your account on your next payday.

Most fees on cash advance apps are optional. If you pay extra for instant funding and include a tip, you’ll end up owing more than you borrowed. Due to the small loan amounts and short repayment periods of cash advance app, the fees may equate to a high annual percentage rate. It’s best to use cash advances infrequently and avoid the fees.

» NEXT STEP: Compare the best cash advance apps

Cash advance from a credit card

You may also have access to cash advances through your credit card. Think of it as using your credit card to "buy" cash rather than goods or services.

Cash advances can be capped at a few hundred to a few thousand dollars, but they’re quick and easy to get. They’re also expensive. You'll likely pay a combination of cash advance fees, ATM or bank fees and a higher interest rate than what you pay to make purchases. Also, the interest starts to accrue immediately.

» NEXT STEP: Contact your credit card issuer to learn how to get a cash advance.

Loan from family or friends

Potential awkwardness aside, asking a loved one for a loan eliminates the need for a formal application and approval process. Having bad credit doesn’t prevent you from getting a family loan.

However, your relationship can be damaged if you don’t repay the loan as expected. Before you borrow from a family member or friend, create a loan agreement with mutually agreed-upon terms, including any interest and a repayment schedule, so both parties are on the same page. Sign and notarize the document.

» NEXT STEP: Decide how much you need to borrow and what a realistic repayment timeline would look like before approaching your family member about a loan.

Pawnshop loan

Like a secured loan from a bank, a pawnshop loan requires you to put up an item you own as collateral. Think jewelry, antiques or electronics. Once you bring the item in, the pawnshop assesses its value, condition and resale potential and makes you an offer, usually about 25% to 60% of the item’s resale value.

If you accept the loan, you walk away with the cash and a pawn ticket. Upon repayment, you can collect your item. If you fail to repay by the deadline — often 30 to 60 days — the pawnshop keeps it.

In addition to interest, some pawnshops charge fees for storage, appraisal and insurance, which can result in an APR over 200%.

» NEXT STEP: Visit multiple local pawnshops to appraise your collateral and ask about their fees to find the best deal.

0% APR credit card

A 0% APR credit card can be one of the cheapest ways to borrow money if you pay off the balance within the card’s zero-interest introductory period — typically 15 to 21 months. You often need good or excellent credit to qualify.

Say you use a 0% APR credit card with a 15-month introductory period to cover an unexpected expense like a medical bill or car repair. If you pay off the balance nine months later, you’ll have borrowed that money without having to pay interest.

» NEXT STEP: Compare the best 0% APR credit cards

Buy now, pay later

You can purchase items now and pay for them over several weeks, usually without interest or fees, using a "buy now, pay later" plan. Many major retailers partner with BNPL companies to offer these payment plans at checkout.

If you get a zero-interest payment option, buy now, pay later is a no-cost way to borrow money for necessary expenses. These plans can also be appealing because most don’t require a hard credit check. But because they’re easy to get, BNPL plans can also lead to overspending.

» NEXT STEP: Compare buy now, pay later apps

401(k) loan

A 401(k) loan allows you to borrow up to half the vested balance in your retirement account or $50,000, whichever is less. You typically have five years to repay the loan.

These loans typically have single-digit interest rates, and the interest you pay goes back to your retirement account. 401(k) loans don’t require a credit check, and missed payments aren’t reported to the credit bureaus. However, if you default on a 401(k) loan, you’ll typically owe taxes on top of an early withdrawal penalty (if you’re younger than 59 ½).

One major downside of a 401(k) loan is that it decreases your retirement nest egg and its potential growth. And if you leave your job before the funds are repaid, you may have to repay the remaining balance quickly to avoid penalties.

» NEXT STEP: Contact your 401(k) plan administrator to learn more about getting a 401(k) loan.

Personal line of credit

Personal lines of credit are offered by some banks and credit unions and behave like a hybrid between a loan and a credit card. You likely have the best chance of getting the lowest rates if you have good or excellent credit.

With a personal line of credit, the lender approves you for a specific credit limit, and you draw funds from that credit line as needed. You only pay interest on the amount you borrow. You can continue borrowing funds and paying down your balance during the draw period, which may last up to five years.

After that, you start making monthly payments and you’re no longer able to borrow additional money. The repayment period might last up to 10 years.

This can be ideal if you aren’t sure how much you need to borrow initially or you plan on needing repeated access to funds.

» NEXT STEP: Check if your local bank or credit union offers personal lines of credit, and compare rates and terms with other lenders.

Home equity financing

If you’re a homeowner, you may qualify for a home equity loan or home equity line of credit (HELOC). Both options allow you to borrow against your home’s value, minus what you owe on the mortgage. Your home serves as collateral, and you can expect lower interest rates than unsecured loans or credit lines.

These options are best used to fund projects that increase the value of your home, but you aren’t restricted to only using them for home improvement purposes.

With a home equity loan, you get a lump-sum payment, which you’ll repay over a period up to 20 or 30 years.

With a HELOC, you’re approved for a specific credit limit. You’ll only withdraw and pay interest on the money you need, similar to a personal line of credit. You can access the funds during the draw period, which is typically 10 years. Then, you’ll repay the money over a term of up to 20 years.

» NEXT STEP: Compare the best lenders for a home equity loan or the best lenders for a HELOC.

What to consider when borrowing money

Here are five things to weigh when choosing the best borrowing method for you.

1. Annual percentage rates. APR represents the total cost of borrowing money. Use it to compare the costs of various borrowing options.

2. Loan amount. Different lenders have different minimum and maximum loan amounts. Determine how much money you need to borrow, and look for lenders that offer that amount.

3. Lending requirements. Consider the lender’s credit score and income requirements, and inquire whether you need to put down collateral to secure the loan. Some lenders — like credit unions and some banks — only provide loans to existing customers, so keep that in mind.

4. Payment amounts. Make sure that repaying what you borrowed won’t cause you to fall behind on your other bills. If you’re considering a loan, use NerdWallet’s personal loan calculator to estimate your monthly payment amount.

5. Funding time. Some borrowing methods provide cash immediately or within a day, while others can take a week or longer. Consider how soon you need the money, and select a lender that can match your desired funding time.

» MORE: Compare two loan options with this calculator

Borrowing options to avoid

Borrowing options with high interest rates or fees and short repayment periods can lead to repeat borrowing, landing you in a cycle of debt. Avoid the following loan types unless you’ve exhausted all other options.

Payday loans

A payday loan is a type of small, short-term loan that’s meant to be repaid with your next paycheck. While you can get cash almost instantly with no credit check, payday lending is extraordinarily costly and should be a last resort. Loans can cost $15 for every $100 borrowed, which equates to an APR of 391% for a two-week loan. Most consumer advocates recommend loan APRs to be no higher than 36% to be considered affordable.

Research from the Consumer Financial Protection Bureau has shown that most payday loan borrowers end up paying more in fees than they originally received in credit, creating a cycle of debt.

» MORE: What is a payday alternative loan?

High-interest installment loans

High-interest installment loans may have longer repayment terms than payday loans, but they have interest rates above 36%.

For example, a $1,000 loan with a six-month term and a 60% APR would cost $182 in interest. The same loan with a 20% APR would cost $59 in interest.

It’s best to avoid high-interest installment loans if possible, as high APRs can make it difficult to pay these loans off.