Alternative borrowing options

Alternative borrowing options

Before committing to a personal loan, consider if another financing option would work better for your situation.

Personal loans from banks and credit unions. Banks and credit unions are less likely to charge origination fees and may offer lower rates, particularly if you’re already a customer or member. These institutions may fund your loan more slowly than online lenders, and some larger banks, including Bank of America and Chase, don't offer personal loans.

Zero-interest credit cards: You’ll pay no interest on expenses you charge during the introductory rate period of a zero-interest credit card — typically the first 15 to 21 months. After that, rates can jump up to almost 30%. Credit card companies often require good to excellent credit to get a zero-interest card.

Home equity financing: If you own a home, you could take out a home equity loan or home equity line of credit (HELOC). For both, you borrow against the value of the home minus what you owe on your mortgage. Home equity loans provide a lump sum, while HELOCs work like a credit line you can draw from as needed. Interest rates for these options are lower than for unsecured personal loans, because your home serves as collateral. Repayment terms are longer, too.

Cash advance apps: If you need a small loan of $200 or less, a cash advance app can be a fast, no-credit-check option with low fees. Repayment can be due as soon as your next paycheck, so make sure you’ll have the funds to cover it.