Read about all the best practices for making loans with your friends, family, and the people you trust. Also, learn how to best navigate Pigeon Loans.

Loan Tips And Tricks | Pigeon Loans

Helping someone out in a time of need is often a great decision! From lending a helping hand to feeling good about making a difference in someone’s life, supporting others is one of the joys of life. 

However, life isn’t always sunshine & rainbows. We’ve all been there - a loved one, colleague, or friend may have gotten themselves into a tough spot. They might need some funds to turn their financial situation around or may need a hand with a financial emergency, but regardless you might be in a position to help and are on the fence about if you should. Most of the time, the answer is yes - you should help someone you care about in need, but sometimes, it’s better not to lend money to friends and family…we know, a controversial take. 🍵

So when is it best to do the hard thing and just say no to lending money? Let’s discuss.

Situation #1: When There’s a Conflict of Interest

If you are a person in a position of power, such as a manager, teacher, doctor, or entrepreneur giving out a personal loan to someone you are “in charge of” can get complicated quickly. In such cases, a loan could be a bad idea if you are lending to someone who is a student, subordinate, or trainee. Whether it be a business loan, a paycheck advance, or other agreement, there can be a perceived (or actual) conflict of interest, favoritism, or even abuse of authority when lending under these circumstances. 

Some important tips to remember when in this situation:

Loans between supervisors and employees, or between higher ranking and lower-ranking co-workers may be illegal or frowned upon in your industry (i.e., military, government employees, etc.).

Having or not having money can shift the power dynamics in any relationship. So consider the closeness of your relationship (i.e., lending to a spouse vs a distant 3rd cousin) and determine whether or not this shift will affect your day-to-day interactions.

Personal liability may mix with professional liability. Lending to an employee or lending to a patient turns a professional relationship into a personal one potentially opening the door to legal, ethical, or moral contentions.



Situation #2: The Reason for the Loan is Unethical or Immoral

Friends and family aren’t likely to scam you, but they may be the potential victims of a scam or have ill intentions regarding the purpose of their loan. Ironically enough, some may not even realize they are a victim of a scam or acknowledge that they are looking for money for all the wrong reasons. 

Well, this matter is tricky, but here are some thoughts to consider if you’ve got a hunch that there may be something fishy going on with your ask for a loan. 🕵️

This is a common element of a potential scam or ill-intent transaction. If your friend or family is being asked to a financial decision quickly with no time to consider other options, then the reason for this loan may not be a good one. 

What are typical motivations in these cases?

The reason for the loan is to take advantage of a “too good to be true deal” that ends very, very soon;

Someone is in dire need of cash for bail or travel money in a foreign country;

The loan amount is larger than you might expect, and you are not receiving sufficient reason as to why the sum of money is so significant;

There is some kind of “legal problem” that requires immediate payoff;

The person you want to loan money to has a questionable history of unethical behavior;

There is a level of vagueness or hesitation to talk about repayment terms.

A Drastic Change In Behavior Or Circumstances 

Sometimes you just aren’t sure about loaning your money and you don’t know why. If something just doesn’t feel right, it’s good to ask questions. 

What can contribute to this feeling of uneasiness about lending money? Sometimes it’s just that -- a funny feeling. But other times there are noticeable warning signs. Have you noticed unusual or unexplained behavior by your friend or family member asking for a loan? Do the circumstances surrounding the ask seem too much like a coincidence?

The need for a quick loan, one time, isn’t that surprising. But in the scenario you are asked a  second or third time for a loan, consider asking more questions. You may not get a straight answer right away if there’s an embarrassing problem motivating the request for help, but it could open the door to a real conversation about what’s going on.

Compassion and tact are key. You may have to let the answers come in their own time, but if you don’t feel right about making a loan, don’t do it. 🧡

😊Tip: Be compassionate when digging deeper into the reasons someone needs a loan. Even if you aren’t willing to help financially, being there for someone emotionally can go a long way as well.

After all the warnings above, you might be left wondering whether it’s even legal to loan money to a friend or family member. Family loans are usually completely harmless as considered by the IRS or uncle sam. Unless you are planning to loan a large sum of money at a 0% interest (check out why that’s a bad idea from a gift tax perspective) you usually don’t have to consider any legal hurdles to help out someone in need. 

However, if going through this process in a unique way, for example:

You are own a business or are lending to a business;

The loan is associated with a bankruptcy or other extreme financial situation;

There exist personal finance liabilities like an outstanding lien, divorce, or death;

You might want to do some background research or consult with a lawyer about your specific matter before moving forward.

It is not illegal for you to lend money to friends and family.  

But even with this fact in mind, the law may have a say in specific matters. If you want to charge interest on your loan or want your loan agreement to be legally binding you’ll need to consider the legal side of this transaction.

We’ve all heard the “never lend money to friends” quotes and sayings. From complicating relationships to broken promises, we know these conversations are tough so it’s understandable that you may have hesitations about lending money to family and friends. Even with these risks in mind, we can all agree though that helping out those closest to you can really change lives, and when done well, the feeling of fulfillment from such a benevolent act is unmatched.

Make sure the next time you ask yourself, “should I loan a friend money” consider the reasons behind the ask, make sure you get a written agreement in place, and organize your finances in such a way that you can afford to lose this money in case it becomes impossible to get your money back.

Want to read more related content? Check out some more of our awesome educational pieces below:

Good Reasons to Borrow Money from Friends or Family

Should You Take Legal Action if a Friend Borrowed Money and Won’t Return It?

How Much Interest Should You Charge for Lending Money? It Depends.

Here’s How to Safely Borrow Money from Strangers

It's human nature to want to help out those we love and care about. But sometimes, lending money to friends & family might not be the right move. Learn when it's appropriate to say no to a family or friend loan.

Friendly Loans: When Not To Lend To Friends & Family

When exploring loan options, borrowers are bombarded with options. 😵‍💫 One such option is a straight loan, also called a term loan. 

Nowadays, conventional loans are the most common type of loan to apply for, but ironically enough, before the mortgage crisis of the 1930’s that led to more than 50% of mortgages going into foreclosure, a straight loan was the loan to get. Default rates were low and borrowers felt confident they could pay back their loans at the end of the term. Who knew? 🤷

Now, borrowers understand that stock prices, real estate, valuable metals, and other investable assets don't increase indefinitely. Paying down debt over the course of a loan term has become more popular because it can reduce financial risk.

However, many individuals and businesses still use straight loans today for small and big investments. 💸  Let’s explore the details of these loans, including how they differ from other types of loans and what you should know before applying for one of your own.

Straight loans (aka term loans), explained

Is a straight loan the same thing as a term loan? And what does it mean?

Did you know? Term loans are a more common way to refer to straight loans, but they mean the same thing. They’re also called interest-only loans and straight term mortgages. Financial jargon can be overwhelming, but don’t let this simple switch cause confusion! All four terms are the same type of loan! 😅

Straight loans are immediate-, short-, or long-term loans in which the borrower only pays down the interest for the majority of the loan. They don’t make payments on the principal (the amount they borrowed) until the end of the loan period, they make interest payments, making this a non-amortized loan. At the end of the loan period, a borrower may choose to refinance the loan or pay off the loan amount.

In contrast, amortization occurs when a borrower gradually pays off a loan principal over a period of time. ⏰

Straight loans fall under the category of special purpose loans: they can be used for business purposes or personal investments. In the early days of mortgages, straight loans were the main type of loan. Today, borrowers typically use them for buying land, financing construction projects, or investing in small business equipment and property.

When is a good time to take out a straight loan? 

A straight loan comes in handy when a borrower requires a lump sum of cash upfront without the requirement to pay off the loan right away. Interest-only loans like this allow for lower payments over the life of the loan. If the borrower uses the loan to invest in something, like land or equipment, they can use any proceeds made on the investment to pay off the loan balance with a full loan repayment at the end.

For business term loans, you will likely need a credit score of at least 600 to qualify. Other factors, like time in business (typically at least one year) and annual revenue (typically at least $100,000), may impact your approval. Personal straight loans may also require a credit score of at least 600 and a low debt-to-income (DTI) ratio of 35% or less.

Features of a straight loan and when you might use one

We’ve defined straight loans somewhat so far—now let’s dig into them a little more.👇🏽 

When you sign a contract for a straight loan, you’re agreeing to pay the interest on the loan on a regular basis. Your installment frequency depends on the agreement, but monthly payments are one of the most common options. These payments continue for the full term of the loan in a non-amortization process and often include a fixed interest rate. At the end of the term, you’re usually expected to pay off the entire principal in a single payment.

If you cannot pay off your principal, you may have the option to refinance the loan, either as another straight loan or a different type of loan altogether.

How straight loans differ from other types of loans

Straight loans are an alternative type of loan. Other loan types include:

Conventional loans: These differ from straight loans in that borrowers pay a down payment and then pay down the loan principal over time (the amortization process described above). Typical home equity loans fall under this category. 🏡 On the contrary, straight loans are interest-only until the end of the loan term. 

Government-backed loans: In the US, the Federal Housing Administration (FHA) insures certain long-term mortgage loans. VA loans guarantee loans to qualified US military veterans. The US Department of Agriculture (USDA) offers loans through its Rural Development program to help people in rural areas buy homes with no down payment and make other investments. Additionally, the Small Business Administration (SBA) has programs in place to link small business owners with loans from third-party lenders. These differ from straight loans in that they amortize. They also come from a federal source, which often means favorable loan conditions.

Seller financing: In the case of mortgage loans, seller financing refers to home sellers financing the loan for the buyer. Straight loans typically go through an official lender or investor, but could potentially go through a seller as well.

There are also other types of special-purpose loans. Open-ended loans, buy-down mortgages, adjustable-rate mortgages, graduated payments mortgages, balloon mortgages, package loans, and more make up this category. All—including straight loans—are unique.

What to know before applying for a straight loan

Some long-term straight loans may not require balloon payments (AKA large, one-time payments) toward the end of a loan term. They may instead spread out the principal payment over multiple installments. However, immediate- and short-term straight loans often do require a balloon payment at the end. 🎈🔚

For long-term straight loans, you may also have to provide collateral (or something of value backing the loan). This is typically a physical asset like a house.

Straight loans often come with lower interest rates than other types of loans. However, they may carry a fixed or variable interest rate. If it’s a variable interest rate, payments could be much higher than they were when you first took out the loan. This can make your loan or mortgage payments pricier than you can afford. Be careful with variable interest rate loans.

If you’re taking out a straight loan to invest in a construction development or another project that you expect will generate income down the line, make sure you have the option to refinance the straight loan at the end of the term. You don’t want to get caught with a balloon payment you can’t afford if the project lags or fails.

You can use a straight loan for any purpose, and you don’t necessarily need to go through a traditional lender to get one. For a non-traditional route, Pigeon Loans is a great option for people to lend money to friends and family. 🐣 The lender and borrower negotiate the loan’s terms themselves (including a straight loan, if that option works best for all parties). Pigeon Loans provides all documentation, stores signed copies, and sends out payment reminders as the due dates come. You can even set custom terms, like origination fees and prepayment penalties, if applicable. 💯

Straight loans (or term loans) are a way for borrowers to get low-interest loans without having to pay off the principal right away. Business owners, individuals, and hopeful homeowners may utilize straight loans to buy equipment, purchase land, fund construction projects, or make other investments.

There are nuances to be aware of before taking out a straight loan. Sift through your options to determine which loan type works best for your situation and will help you thrive in work and life. 🤸🏾‍♀️

In a Pinch? 10 Sources of Quick Cash + 5 To Be Careful Of

How To Start a Business With No Money in 2022

Straight loans (term loans) are a way for borrowers to get money up front without having to pay the loan principal right away. Here's how they work.

What is a Straight Loan? And is it Right for You?

According to Pew Research, at least 16% of Americans have used gig work to earn money. 💸 The groups most likely to do so include Hispanic adults, folks in lower income brackets, and young workers under the age of 30. Are you one of them?

Gig workers earn income through contract (“gig”-based) labor and file taxes as self-employed. Because of their alternative employment status, those in the gig economy must often work harder to receive the same personal loan options as traditional employees. Here’s how gig workers and loans tie into each other, as well as options for scoring a personal loan or business loan as a self-employed individual.

How fintech loans and the gig economy go hand in hand

What to know before borrowing money as a gig worker

How loans help you thrive when you need a boost


The gig economy represents a sector of self-employed people earning income through contract or gig-based agreements, rather than the traditional employee-employer relationship. A traditional worker may receive a W-2 tax form and have taxes withheld from regular paychecks, but a gig worker may receive a 1099-MISC tax return and pays estimated quarterly taxes to the IRS based on net profit.

Contract delivery driving (FedEx, Amazon)

In-person freelance services (DJ, photographer)

App-based or digitally sourced freelance services (writer, graphic designer, virtual assistant)

FinTech, explained—and how it applies to gig workers

Gig economy workers have to work harder to prove themselves to lenders as reliable independent contractors. This can make it difficult to get a traditional loan (or one with a fair interest rate). However, the rise of fintech (financial technology) innovation has increased options for the growing population. 🧑🏽‍💻

It often takes two or more years of regular gig work income and a good credit score to prove to lenders you’re a reliable borrower. Plus, some traditional loan options don’t work for gig workers who lack standard paychecks or bank statements and have fluctuating gross income (for example, a high-interest payday loan is usually NOT wise for someone who hasn’t already secured their next check).

A legacy financial institution, like your local bank, may be a hard nut to crack. 🥜🏦 As both fintech and gig work industries expand, we’re seeing more borrowing options appearing all the time. A few alternative borrowing options include buy-now-pay-later (BNPL) solutions for expenses, peer-to-peer loans, and social loans between friends and family.

Take Pigeon Loans for example—we’re a social lending platform that lets you borrow money from a friend, family member, or trusted investor. 🐣 Whether you’re self-employed or a small business owner, Pigeon ensures a smooth, secure loan process with someone willing to help you for no cost at all.

Social loans between associated parties have plenty of advantages (including tailored loan contract terms and affordable interest rates). Social loans include personal loans from friends, family, or acquaintances who want to invest in your venture. If this option is right for you, you can easily set up and track your social loan using Pigeon Loans' free tool here.

Borrow money as needed and pay interest only on what you’ve borrowed. 

The interest rate stays steady for the loan’s lifetime. (You may not want to get caught with a variable interest rate if you have fluctuating income, which is common for gig workers.)

For those with a lower credit score or limited income history, a joint loan may be more attainable. 🤝🏿 Having a co-signer can help reduce your interest rate and make the loan more affordable.

Term loans, aka straight loans, allow a borrower to get money upfront while only paying interest on the loan for its lifetime. At the end of the loan term, the borrower may pay a balloon payment (aka large one-time payment) or refinance the loan.

What to know before borrowing money in the gig economy

Experts like to tout the importance of having an emergency fund, or a sum of cash in a savings account you can access in an emergency. 

“Financial advisors tend to suggest 3–6 months of living expenses,” says Erin Lowry, author of the Broke Millennial book series. Gig workers with fluctuating income may want to err on the side of caution, saving upwards of six months of living expenses if possible.

If you can’t save that much money before taking out a loan, get as much of a cushion as you can. Borrow only what you absolutely need, to keep the monthly premium low enough that you can still save money for yourself while paying off your loan (rather than the loan payoff taking every penny from you).

Whether you choose to use a traditional bank or fintech platform to get one of these loans is up to you and the loan amount you need, but know this:

According to a study by New York University scholars, fintech lenders tend to lend more money to more people of color compared to banks. The study, Automation and Racial Disparities in Small Business Lending, used the Paycheck Protection Program during the pandemic as a case study. Fintech lenders made 26.5% of their PPP loans to Black-owned businesses, while small banks were at just 3.3%. 🤯

When selecting a loan platform, consider its legitimacy. The strides in fintech are incredible, but remember that regulation is limited for non-bank institutions, so be careful choosing your option. Look up customer reviews and news articles to make sure the platform you choose is transparent and trustworthy. You may also want to avoid high-interest loan options, like getting a cash advance from your credit card. These options tend to be much more expensive to you.

When you need a boost, loans can help you thrive in the gig economy

Loans help gig workers thrive, and here’s why.

Many independent contractors set their own rates. However, companies that base the majority of their employment model on contract labor (for example, Uber and DoorDash 🚗) determine gig worker rates. As a result, they tend to run into issues surrounding fair pay and worker treatment.

Workers at these companies are fighting to unionize while regulators are seeking to place strict limitations on what gig work employers can and cannot do. Unfortunately, legislation like California’s AB-5 placed major obstacles in the way of perfectly satisfied gig workers while seeking to protect others.

Even with rideshare gas surcharges (an extra $0.55 per Lyft ride at the time of this writing, which the customer pays to the driver) in response to soaring fuel costs and broad hyperinflation, many workers are having difficulty keeping up with a changing economy. ⛽

And even with the added freedom of gig work, you can see where the gig economy's need for capital stems from.

While bonus programs at large gig-based apps do exist, those bonuses are often only achieved after focusing a lot of time and effort on your gig. This can be difficult to achieve on a regular cadence, yet another reason why personal loans are so helpful for the gig economy.

The need for loans in the gig economy is clear. If you’re a gig worker and decide to pursue a personal loan, know the risks and opportunities you may face. This will help you make the best choice in which personal loan type is best for you.

Remember: Independent workers are just as valuable as those in a traditional employment setting. Let your personal loan options work for you. 💯

Gig economy workers often have a different loan story than traditional employers. Here are your personal loan options as a gig worker.

5 Great Personal Loan Options For Gig Economy Workers (DoorDashers, Uber Drivers, etc.)

Just when you think all the puzzle pieces in life are starting to come together—you’ve got a new job, you’re learning the basics of budgeting, you’re in a great relationship — life happens and you find yourself needing to buy a new refrigerator to the tune of $1,500. 🥲

Knowing you don’t have that much to shell out, your best friend offers to lend you the cash. “It’s no big deal…pay me back whenever,” he tells you. 

You nod your head in agreement and smile, thankful for the kind gesture. But your gut has a different reaction: “Do I really want to borrow from a friend?” Your sixth sense is telling you that something’s not quite right about borrowing this money with no strings attached. 

Maybe you can’t pinpoint exactly what is making you feel uneasy, but it’s a valid feeling. Borrowing money from a friend or family member is a tough decision to make, and without resources like a promissory note, it’s often a transaction that can have disastrous consequences. 

Let’s take a look at five benefits that come from having an iron-clad loan agreement when borrowing from friends and family. 

1. Promissory notes make the agreement legally binding

Sure you can write a promissory note on the back of a napkin, but having it neat and tidy in a digital document is better. Digital copies of your agreement are easy to refer back to, and no one will mistakenly toss it in the trash if they see it on your desk. 

Names and contact information of the parties

Including these elements means that your written agreement can be used as evidence in small claims court and will prevent your promissory note from potentially being invalid. You may opt to go a step further and notarize a promissory note for extra authentication. 

2. A promissory note gives the lender peace of mind…

When you have a promissory note that’s legally binding, family and friends are more likely to agree to loan you some of their hard-earned cash. 

Knowing there are options as to how to handle your loan if there is a borrower default, like going to small claims court, writing off the loss on their taxes, or forgiving the debt entirely reduces the risk that your lender is taking on. And that’s a good thing for both of you. 

Even if you are certain you’ll make every payment on time, repay the loan in full, and your lender thinks they may never need to enforce your agreement, simply having one in place can eliminate any doubts and much of the stress that surrounds borrowing from family and friends.  

3. …and doesn’t make your relationship weird

There’s a joke in the personal finance world that says that “Thanksgiving dinner tastes different when you owe money to your relatives”. Even if your lender is the sweetest person in the world, and you as a borrower are very intentional about repaying your loan, there’s a chance that one — or both — parties have a weird feeling about the borrower-lender dynamic of your relationship.

When you borrow that $1,500 from your brother with a promissory note, a binding promise to pay him something along the lines of $250 a month for six months plus interest, there’s less room for ambiguity. 

When you use Pigeon Loans to structure your loan, you have transparency and accessibility for both parties. Your brother will never have to awkwardly remind you to send a payment, you won’t have to exchange bank account information, and you’ll set all of this up in no time at all. 

4. Promissory notes hold you accountable 

Knowing that you have signed a promissory note motivates you to keep your word. Not that you wouldn’t repay your loved one, but without a formal agreement that one-year repayment term might turn into two or three, or even ten years. 

When you have the terms of a loan written out in a promissory note, you’re more likely to treat this loan as seriously as you would a personal loan from a bank or your credit card payments. 

5. Promissory notes keep records clear for Uncle Sam (and you)

People don’t generally think about the tax implications on the money borrowed from or lent to friends and family, especially if it’s a small amount. But since earning interest on money you lend out can be considered income, it's no surprise that "Uncle Sam" and other local tax authorities where you live may be entitled to a cut of the interest you receive as a lender. Documenting your loan terms in your promissory note will help you avoid the tax pitfalls of borrowing money. 

Having crystal clear agreement terms and payment records is essential, especially if the loan amount is over $10,000. For these high-dollar loans, interest rates should also be set at or above the current Applicable Federal Rates because the IRS assumes that you are paying interest. While anyone who lends you money may be cool with giving you a 0% interest rate, due to taxes, your benevolent lender could unknowingly lose money by doing this. 

Create a promissory note with Pigeon Loans

By now, it’s crystal clear that having a promissory note isn’t just a good idea — it’s a necessity. 

From outlining all of the terms of the loan to eliminating ambiguity and aiding in the event of a loan default, it helps to ensure that your experience in borrowing from family and friends is a great experience.

If you’re borrowing money from a friend or family member, having a contract (aka a promissory note) is the way to go! Download our free promissory note and loan agreement template today. 🏆

Borrowing money from friends or family members can get messy. Learn how documenting your loan in a contract can help you save time and avoid headaches.

5 Reasons Why You Need A Promissory Note When You Borrow Money From Family and Friends + Template

When you’re dealing with an unexpected financial difficulty and don't have savings to bail you out, you could be facing only two options: using a credit card or getting a personal loan.

Making the right decision in these situations could make or break you financially. Whether you have excellent credit or nothing more than an entry-level checking account, we’ll help you examine the details of credit card and personal loan options so that you can make a well-informed decision. 

Key Differences Between Credit Cards And Personal Loans

Credit cards, borrowing money from strangers, asking for help from a friend, or applying for a personal loan can help get you the funds you need. However, each option comes with specific terms and repayment policies, and knowing all the things to consider will help you decide which works best for you. 

Let’s break this down the personal loan vs credit card battle side-by-side 👷

When thinking about getting a personal loan or opening up a new credit card, you should consider the fact that your options are limited based on your credit score. The higher your score, the greater your credit card limit or personal loan you are likely to receive. 

⚠️Word of Caution: Individuals with low credit scores may not always be eligible to obtain either a credit card or a personal loan. If credit score thresholds are a concern for you, use a service like Credit Karma to look up your credit score.

Summary: Credit cards are revolving loans given out at variable interest rates, and are designed to pay for small to medium debts or expenses which usually don’t require collateral. Personal loans tend to be larger loans with fixed rates and are designed to take care of medium to large debts or expenses, but getting one sometimes requires collateral.

Personal loans are financial instruments that are the better option in certain scenarios and circumstances. You may prefer a personal loan when you:

1. Want to consolidate high-interest debt: Most personal loans usually carry the lowest rates. They are the better option when combining multiple sources of high-interest debt into a single loan.

2. Want to finance a huge expense: Personal loans are very effective when trying to finance a large expense. For instance, if you want to buy a car, land property, or start a home improvement project, a personal loan could guarantee a smooth process.

3. Want to make monthly payments: Personal loans have great repayment plans that span a few months to some years. A personal loan would suffice if you can plan for seamless and timely monthly repayments.

4. Do have collateral: Not all personal loans require collateral, however, especially if you have good credit. Some lenders may want a cosigner or evidence of a good debt to income ratio if you can’t prove creditworthiness, but most don't. If you don't have collateral, you may still be able to get a personal loan with no issues.  

Like every financial solution, there are pros and cons to taking out a personal loan. 

They offer steady and fixed installment repayments over a long period.

They are predictable and allow for better financial planning.

Rates may be higher for low credit borrowers.

Repayment is scheduled and must not be defaulted, or else collateral will be seized if the loan is secured.

They are designed to be taken out infrequently.

You receive one lump sum, nothing more, nothing less.

How a personal loan will affect your credit score

Obtaining a personal loan could either dent or improve your credit score. For instance, if you as a borrower make timely repayments on your personal loan, the impact on his credit history will be positive - if you miss a payment, you may see some negative changes to your scores.

According to FICO, your credit score is calculated using multiple data points and revealed in a report which satisfies five categories. Each category contributes a different percentage to the overall credit score like so:

Amounts owed (a.k.a. "credit utilization") - 30%

Depending on the who is issuing your loan, a personal loan will affect your credit score via different avenues:

Application: When applying for a personal loan, your lender might conduct a deep dive into your credit, AKA a hard credit pull. This credit check gets recorded on your credit report as a credit inquiry. 

Repayment: Your credit score will increase if repayments are made timely and on schedule each month. However, a late payment (after 30 days) or a  frequency of late payments will dock several points off your credit score. It will take several years for a late payment to leave your credit report.

Summary: Personal loans are great for offsetting large one-time expenses. Individuals with low credit scores may not be offered favorable terms, and how on time you are with repayments every month will affect your credit score.

Credit cards offer a line of credit, and there are many scenarios where they are the better-suited option. You should use a credit card when you want:

1. Ongoing access to funds: Credit cards offer a revolving form of credit that guarantees repeated access to funds until your limit is reached.

2. To finance smaller expenses: Credit cards are better suited to covering small bills and financing smaller expenses. They are the better option for frequent and regular purchases and expenses like utilities, groceries, shopping, etc.

3. More flexibility: Credit cards are more flexible. They allow more wiggle room in repayment and accessibility of funds, as a revolving credit card can offer an increase in credit limits.

4. To pay off the balance in full: Paying your credit card balance in full each month prevents you from getting charged interest.

5. Qualify for a zero-interest promotion card: You should obtain a credit card if your end goal is to qualify for a 0% intro apr or similar promotion.

Just like personal loans, credit cards have their pros and cons.

Interest-free purchases from full monthly repayments.

Access to rewards, cash advances, and cashback for cardholders.

Credit limit increase for cardholders in good standing.

Higher interest rates than personal loans if full repayments aren't made each month.

The convenience could push cardholders into racking up debt.

Some credit cards aren't accepted for payment by all establishments.

How a credit card will affect your credit score

When you’re dealing with an unexpected financial difficulty and don't have savings to bail you out, you could be facing only two options; learn whether a credit card or personal loan is the best option for you.

Credit Card vs Personal Loan: Which Option Is Best For You?

We've all been there: an unexpected bill comes in, a medical emergency happens, you get laid off, or your car breaks down. Things come up, and sometimes the funds just aren't there. 

When you need to get money fast, many options are available, and some are better than others. How do you know where to start? You start with this list! 📝

We know times can get tough and you may be in search of a little extra cash, so we've reviewed the most popular ways to find it. Learn the pros and cons of the best quick cash methods, and then learn which ways you want to steer clear of at all costs.  

So how do you make quick cash without high-interest credit cards or visiting a loan shark? Let’s dive into the top 10 ways to get quick cash in a pinch. 

One of the fastest ways to earn some spending money is by selling items you no longer need. There are many ways to sell to make extra cash. For example, thredUp can help you sell your clothes, and Decclutr offers to buy recent tech gadgets. 

Selling items online can still take some time, though. You have to prepare your items, communicate with your buyer or marketplace, send in your items, and then wait for payment. If this sounds like a painstaking process for you, why not try hosting a garage sale or adding to a thrift store - it could be a quicker way to cash in on clothing, jewelry, books, video games, furniture, kids' toys, and more! 

There are numerous things to sell to make quick cash - listing items on Craigslist or Facebook Groups are popular options to do so, plus there are specific apps like Facebook Marketplace dedicated to helping users sell to make money off of unwanted items locally. 

If you are in a real hurry and don't have the time to list your items and wait for a sale, a pawn shop might be the way to go. ⚠️However, you should know that they will most likely give you only a fraction of what you could get from a private sale. 

Potential earnings of hundreds of dollars

Offering second-hand items is eco-friendly

Sales can be time-consuming if you own a lot of items

Top 10 ways to make money fast when you need quick cash for emergencies. Plus, five fast cash pitfalls to avoid to protect your financial future.

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