Money might not buy happiness. But sometimes it buys you time, opportunities, peace of mind… Borrowing money is something most people will need to consider at one point or another, whether it’s covering unexpected expenses, funding your education, or just surviving until your next paycheck. Here are five possible ways to borrow money if you need to, and what the perks and pitfalls are for each.

Borrowing is a big commitment. And the options for borrowing can feel overwhelming. Not every solution is suited to every problem, and making the wrong choice can lead to unnecessary stress (and bigger financial woes).

So how do you figure out the best way to borrow? You need to evaluate your unique situation. Start by answering these questions:

• Why do I need the money? Is it a short-term emergency like a car repair, or something long-term like tuition?
• How much do I really need? Be realistic about your requirements, but avoid borrowing more than necessary.
• What’s my repayment ability? Being honest about your timeline and budget is key to finding a sustainable solution.

No two borrowing scenarios are the same — which is why understanding your options is vital.

1. Borrowing From Family or Friends

It might be difficult or awkward to ask, but borrowing from loved ones can be one of the most flexible options. If you’re transparent about why you need the money and your plan for paying it back, you may find they’re more than happy to help.

When it works:

• Small, short-term loans for emergencies, like covering rent or a sudden medical cost.
• When you can pay it back quickly and avoid straining the relationship.

Advantages:

• No interest (usually).
• Flexible repayment terms tailored to your situation.

Things to watch for:

• Strained Relationships: Communication is EVERYTHING here. Not paying them back can cause serious fallout and resentment.
• Agreeing on Terms: Even with your bestie or a sibling, set clear terms upfront. A casual handshake agreement might not cut it.

Tip: Put your agreement in writing so both sides are on the same page. Even an informal letter can save headaches later.

2. Payday Loans

Payday loans are short-term, high-interest loans designed for people in emergencies. They offer quick cash, but you have to be aware of the terms and conditions before you commit.

When it works:

• When you don’t have any cash available and an emergency expense is unavoidable.

Advantages:

• Fast access to cash with minimal requirements (even poor credit scores are accepted).
• Typically doesn’t need collateral.
• There are even no refusal payday loans for people who don’t have borrowing options elsewhere.

Things to watch for:

• Interest Rates: The APR on some of these loans can high, so reading the small print is important.
• Short Repayment Periods: You’ll usually need to pay the loan (and interest) back within two weeks.

Tip: Compare different payday loan providers to find the right fit for you.

3. Credit Cards

Credit cards are seemingly everywhere, from bank counters to online ads. They’re convenient and effective for smaller, short-term borrowing needs. But they come with a catch: interest rates.

When it works:

• You need to make a purchase now and pay it off within the month (e.g., grocery shopping, sudden travel costs).

Advantages:

• Super convenient for immediate needs.
• You build credit when used responsibly, which helps later when applying for loans or mortgages.

Things to watch for:

• High Interest Rates: Unless you pay your full balance off each month, interest can snowball rapidly.
• Temptation to Over-Spend: Swiping that card feels painless until the bill arrives.

Tip: Look out for cards with low introductory interest rates or cashback rewards, but don’t get tricked into overspending to earn points.

4. Personal Loans

Personal loans are one of the most versatile options. Offered by banks, online lenders, and even credit unions, these loans are typically unsecured (meaning no collateral is required).

When it works:

• Medium to large expenses, like paying for a wedding or consolidating high-interest debt.
• You need a structured repayment plan with fixed monthly payments.

Advantages:

• Lower interest rates than credit cards.
• Fixed repayment terms so there are no surprises.

Things to watch for:

• Credit Score Dependency: If your credit isn’t stellar, you might face high rates or even rejection.
• Fees: Some lenders sneak in origination fees or penalties for early repayment.

Tip: Shop around to compare lenders and read the fine print before committing. An extra percentage point in interest can cost you hundreds (or thousands).

5. Peer-to-Peer Lending

Don’t want to deal with traditional banks? Peer-to-peer (P2P) lending platforms like LendingClub and Prosper directly connect borrowers with individual lenders. Think of it as borrowing money from strangers on the internet — but in a secure, structured way.

When it works:

• If you have decent credit or a strong repayment plan but need more flexible loan options than a bank offers.
• Medium-sized loans, like buying furniture or funding a small business venture.

Advantages:

• Competitive interest rates based on your creditworthiness.
• Transparent, straightforward process that avoids traditional bureaucracy.

Things to watch for:

• Credit Checks: You’ll likely need at least a fair credit score to secure favorable rates.
• Platform Fees: Some P2P lenders charge origination fees or monthly service fees.

Tip: Research different platforms, as fees and rates vary widely. Look for reviews or recommendations to find the right one for you.

There’s no one-size-fits-all solution when it comes to borrowing money. The best method depends on your specific needs, your financial health, and how quickly you can repay. The key is to weigh the risks and benefits honestly and choose the path that has the least long-term impact on your finances.

If you’re still unsure about which route to take, don’t be afraid to seek financial advice. Many organizations and tools exist to help people make smarter money decisions — including free budgeting tools, credit score trackers, and financial advisors.