5 ways to borrow money: choose the most profitable one.

Published 13 days ago

There is no single tool that is suitable for every life situation.

1. Bank loan

This is a whole group of financial instruments, which includes consumer, car loans and mortgages. Typically, borrowers expect to receive significant amounts for large purchases. Here are the main advantages of bank loans.

Large sum. As a rule, it will be enough for a large purchase.
Long term. You can take out a loan for six months, a year, a couple of years, and even several decades when it comes to a mortgage.
Low percentage. Compared to credit cards, loans from microfinance organizations and pawnshops, bank rates are lower.

In 2024, Russian credit organizations offer to take money from them on these terms.

Consumer loans in cash. If you compare offers from different banks, you can see a wide range of rates. They range from 13 to 60% per annum and depend on the loan amount and the availability of collateral. According to the Central Bank, the average rate on loans for up to a year is 22.5–27%. For loans for a period of more than a year - 16–18%.
Car loans. Here, the average rate on a car loan for up to a year ranges from 8 to 14%. But if you take it over a couple of years, it’s already noticeably higher - 16–18%.
Mortgage. The average loan rate for the purchase of real estate in 2024 is 8.4%.

But despite all the advantages, bank loans have features that some clients consider disadvantages:

A good credit history is required. The larger the loan amount, the more attentive banks can be to the borrower’s previous actions. But if you have used loans before and always repaid your debts on time, there is no need to worry.
For a large loan, collateral may be required. Sometimes an excellent credit history is not enough, and the bank wants additional guarantees. In this case, he can provide a significant amount, but only on the security of property. For example, real estate. The amounts that the bank is willing to issue with and without collateral differ significantly.
You need to present a lot of documents. For example, when applying for a mortgage, in addition to a passport, a financial institution may ask for SNILS, a copy of your work record book and a certificate of income.
Long processing time for applications. Typically banks consider applications up to 5 working days, but it can take longer.
Possible refusal. The bank may not give you a loan at all or offer you a smaller amount than you expected.

So, you should contact the bank when you need a large sum for a long period of time. For example, for the purchase of an apartment, a car or a set of furniture, for repairs, for training. Another option for using this tool is to refinance several previously taken loans. In this case, all your previous loans are combined and the interest rate may be reduced.

2. Credit card

It is used when you need money quickly, and you can return the required amount during the grace period. Advantages of credit cards:

The money will be credited to your account immediately. You can immediately use them for non-cash payments. You can usually receive a plastic card in 1–2 days.
There is a grace period. It will allow you to avoid paying interest on borrowed money. If you return the entire amount within the deadline set by the bank, you will not overpay a penny. Typically, the grace period, or grace period, lasts from 30 to 120 days.
Cashback is provided for purchases. If you pay in supermarkets, fitness clubs, or clinics with a card, the bank will return 1% of your expenses. For some categories of goods or when purchasing from bank partners, the cashback may be higher - up to 10 or even up to 30%. All details are usually available in the mobile banking application.

Credit cards also have disadvantages:

Relatively small loan amount. If you have been using the services of a bank for a long time, most likely, you can instantly apply for a credit card using the mobile application. The spending limit on the card has already been determined by your bank. This amount depends on your regular income and expenses. As a rule, you can borrow several tens of thousands of rubles without any problems. Perhaps the bank will offer you larger amounts - up to several hundred thousand. The maximum amount depends on your credit history. If you repay your debts on time, the bank may increase the current limit, but this will not happen immediately.
Higher interest rate compared to consumer loans. If you do not have time to return the money during the grace period, the overpayment may be significant. The average rate on credit cards ranges from 25 to 40% per annum.
Paid credit card service. There are cards that do not require additional expenses. But not all banks offer free credit cards. Some financial organizations charge from 500 to 3,500 rubles per year for their services.
Cash withdrawal fee. Some financial institutions do not charge for this procedure. However, there are cards from which you can withdraw money from an ATM only for 3–5% of the amount.

It is worth considering a credit card if you urgently need money within a few tens or a little more than a hundred thousand rubles. You can use these funds to pay for medical procedures, training, and car repairs. Or pay with a credit card for daily purchases if your savings have run out for some reason. But before activating the card, you should make sure that you can return the entire amount or at least more than half of it during the grace period. If not, it makes sense to think about a consumer loan, where the rates are lower.

3. Loan from a microfinance organization

This specific tool should be used only when money is really needed urgently and there are no other ways to get it. MFOs can issue loans up to one million. But if you look for offers from similar organizations on the Internet, you will see that many of them are ready to offer clients a maximum of 30,000 rubles.

This tool has several advantages:

The money will come to the card immediately. Often applications for microloans are reviewed by a robot, and the transfer is sent almost immediately after the request.
You can take out a loan even if you have a bad credit history or no verified income. Microfinance organizations are often approached by people who have already been denied a loan by banks.
The first loan from an MFO can sometimes be obtained at 0%. However, provided that it is repaid on time, the money must be paid before the specified day and hour, without delaying the payment even for a few minutes.

We pay special attention to the disadvantages of loans from microfinance organizations:

MFO charges huge interest. This is the main disadvantage. The maximum rate that lenders can set is limited by the Central Bank. Lenders do not have the right to issue a loan with a rate higher than 0.8% per day; for the year this value will be 292%. This is a huge amount. If you take out a loan in the amount of 30,000 rubles, then after a year, repaying the debt in equal parts every month, you will give the MFO 94,458 rubles. And in addition to the interest rate, there are also penalties and late fees.
Only one loan is available at 0% interest. It will no longer be possible to take a second one on the same terms - you will have to overpay even if you repay the debt on time.
The debt must be repaid within a month. Some MFOs borrow money for a period of 5 to 21 days. Others draw up an agreement for up to 30 days.

So, you should take out a loan from an MFO only in a desperate situation. For example, you urgently needed money for treatment, there was a week until payday. But the credit history is badly damaged; banks have already repeatedly refused even a small loan. At the same time, it is impossible to borrow from friends and acquaintances.

Only as a last resort, when all other ways to find money have already been tried, can you contact an MFO. In this case, you should only count on a small amount and a short period of time.

Important: read each clause of the contract carefully. Sometimes creditors use various tricks to charge you additional penalties, fines, fees and other charges that you may not be aware of. And it is highly not recommended to delay payment even for half an hour. It is better to pay a day before the deadline, and make sure that the money is credited and the debt is repaid.

4. Loan secured by a pawnshop

This option is suitable if you urgently need money and you have a valuable item that you are not going to use for a long time. For example, an expensive necklace with precious stones. Or a long fur coat that you won't wear from March to November. You can pledge anything except real estate.

Advantages of a loan from a pawnshop:

You will receive the money immediately. Bring the item to the pawnshop, the appraisers name the amount they are willing to pay on bail, and in a quarter of an hour the money is yours. As a rule, the estimated value of an item will be lower than the market value.
You definitely won't be bothered by debt collectors. If you cannot repay the loan with interest, then according to the agreement you will cease to be the owner of the thing left as collateral.
To apply for a loan, you only need a passport. You will not be asked for any proof of income.

But there are also serious disadvantages of going to a pawnshop:

High interest rate. It exceeds bank interest several times. As of April 2024, the average rate on loans from pawnshops was 88% per annum.
Short loan term. You can issue a deposit for a year, but then you will have to overpay a lot. Therefore, such loans are usually taken out for a period of several days to a month.

You should go to a pawnshop if you need money urgently, you can’t get a credit card, but you have an expensive item that you don’t intend to use for a long time. Remember that you will need to repay the debt quickly and on time, otherwise you may lose your property.

5. Borrow money from friends

This method is suitable in almost any situation. The main thing is that you have friends, relatives or acquaintances to whom you can ask for a loan. And they would agree to lend you money on terms that suit everyone.

You can agree on any amount for the period you need. Good friends can even give you money without interest. The most important thing is not to forget about this debt and pay it off on time.

There is, perhaps, only one downside to turning to friends: you may not find a person who will be willing to lend you the required amount. Therefore, if you need money urgently, this type of loan may not be suitable.

Choose the option that will be most profitable for you. But no matter which way you prefer to get a loan, the main thing is to repay the money on time.