4 Ways to Borrow a Small Amount of Money

Personal Loan

Credit Card

Overdraft

Friends or Family
Each of them has different pros and cons that can affect your credit rating in different ways as well as costing a varied amount of money.
Personal Loan
Pros

Regular Repayments

Can improve your credit record

Quick to apply for
Cons

Only for sums over £500

More expensive rates

Need strong credit to apply
You can borrow between £500 and £35000 using a personal loan, so it is still worth considering even if you only want to borrow a small amount.
However, you may have to pay a higher rate for a smaller personal loan because the best rates are for larger loans, normally between £7500 and £15000. Some lenders do not lend less than £1000 too, so you may have less choice.
If you have a poor credit record then you may be better off applying for a guarantor loan instead of a standard personal loan, but you will need to help of a friend or family member.
Credit Card
Pros

Cheap option if you get a 0% card

Can improve your credit record

Quick to apply for
Cons

Can take a while for a card to arrive

Need strong credit for best cards

Withdrawing cash is very expensive
A credit card could be a quick and easy way for you to borrow a small amount of money. Most cards offer credit limits of several hundred pounds or more and you can choose to borrow exactly the amount you need.
Even better, with a 0% card you can avoid paying any interest at all. Alternatively, you could transfer cash into your account for a small fee with a 0% card. Withdraw cash from your card though and it becomes very expensive.
Overdraft
Pros

Flexible

Some banks offer 0% rates

Quick if you have an existing account
Cons

Need a strong credit record

High fees if you go over your limit

Need a bank account
With an approved overdraft you can borrow from your bank account by withdrawing cash or using your debit card. Furthermore, some banks offer 0% overdrafts for small amounts, which can make this one of the cheapest ways to borrow. Standard overdraft rates are around 15-20% APR but other fees may apply.
Friends or Family
Pros

Can be cheapest option

No impact on your credit record

You can agree a loan term
Cons

Need willing friends or family

No formal terms or rights

Owe money to friends or family
Asking to borrow money from friends or family could be cheap and flexible, but it isn’t always the best option. How much does it cost though? Well, this all depends on what you agree with the person lending you the money, but borrowing from friends or family could be your cheapest option.
So, which of these is better for you? A personal loan, credit card, overdraft or borrowing from friends? Let us know, and if you are in need of any personal loan options get in touch with us today.