Although it’s wise to try and avoid getting into unmanageable debt, there are some situations when borrowing money might be necessary, or even a good idea for building your credit history. Most of the time, you will find it impossible to make a large purchase, such as buying your own property, without borrowing some money first. And you’ll also be credit-checked, meaning that those forms of short-term finance you’ve had can go in your favour if you have made payments on time and managed them well.

Today, it’s difficult to get away from borrowing money and credit agreements. If you want to get a new smartphone contract, for example, this is classed as a form of borrowing. Taking out a loan or using short-term finance might be inevitable if you need to cover emergency expenses at home or have an unexpected bill to pay.

So, what are the best options for millennials who need to borrow some money over the short term?

Short-Term or Payday Loans

If you only need to borrow a small amount of money to cover an emergency repair to your car, buy a new appliance for your kitchen or pay a bill that is higher than usual, then it makes no sense for you to repay the money you’ve borrowed over a long period of time. For these situations, short-term loans can be an ideal way to quickly get the money that you need and have it paid back within a matter of weeks or months.

You can get short-term loans that are repaid in smaller instalments over the next few weeks or months or loans that are designed to be repaid in full on your next payday. Whichever option you choose, it’s crucial to make sure that the repayments are going to be affordable for you. Payday UK is a short-term loan broker designed to help you find the best product for your needs. By using Payday UK, you can search for the most suitable short-term options for you and apply for the ones that you are most likely to be accepted for.

Buy Now, Pay Later

Buy now, pay later is becoming more and more popular today, with services like Klarna, ClearPay, Laybuy and Zilch taking over the consumer market. If you are faced with something that you need to buy but want to spread the cost, this can be ideal as most of these options do not charge any interest. Along with this, they’re often also easy to get even if your credit score is not the best. Just bear in mind that missing payments is likely to damage your credit score further, so always be wise regarding what you use them for and make sure that you’ll be able to easily afford the spread payments before you use these apps to buy.

Zero or Low-Interest Credit Cards

A credit card with a 0% interest rate or fee-free balance transfer option is a popular choice for many people today, and these kinds of cards are more readily available to people who have a good credit score. Getting a credit card is a great option for anybody who wants to have access to money that they can use quickly in any situation. 0% interest credit cards tend to have a grace period of around six to eighteen months where you do not need to pay any interest on the money that you spend. This allows you to borrow without it costing you any more, compared to spending normally. The wisest way to make use of this type of card is to transfer the balance to another 0% interest credit card once your interest-free period is up, allowing you to get the benefits for longer.

Credit Unions

A credit union will typically offer more flexible lending options and lower interest rates compared to banks and other lenders. Generally, the average credit union will charge interest that’s around 1.5-2 percentage points lower compared to a loan from the bank. They’re also more likely to offer short-term loans compared to banks, which generally offer larger loans designed to be repaid over a longer period of time. When you join a credit union, you will usually be eligible for a variety of different products based on your membership status, income, credit score, and the amount of finance you are looking for.

Peer to Peer Lending

Peer to peer lending is an alternative way to borrow money that offers an investment opportunity to the lenders. This can be a good option if you’re looking for a smaller loan with lower interest rates. You can use a peer to peer lending site to search for a suitable lender, who will provide you with the finance that you need if your application is accepted. Interest rates will typically depend on your credit score and history, with lower interest rates available for people who have a high credit score.

Borrowing from Friends or Family

Finally, borrowing from friends or family could be a good option if you want an unofficial loan that’s more flexible when it comes to repayments. Friends and family might be willing to help you out if you are in a tough financial spot or need some additional cash to cover an extra expense. However, when borrowing from friends and family, it’s important to make sure that you are sensible about it and committed to repaying them. Failing to repay money that you’ve borrowed from somebody else in your life could absolutely ruin that relationship. Make sure that you and your friend or relative have agreed on when you’re going to repay them, and how much to repay them each week or month if you are going to be making regular payments back to them for the loan.

Tips for Smart Borrowing

While it’s always a better idea to use your savings or your income if possible, there might be some situations where you cannot avoid borrowing money. If you’re in one of these situations, it’s important to take a wise approach to borrowing to avoid problems further down the line. Some tips to keep in mind, include:

  • Only borrow what you need: While it can be tempting to accept an offer of a larger loan, this only means more interest and higher future repayments. If you don’t need the extra money, don’t take it.
  • Know your budget: Whether you’re getting a short-term loan, borrowing money from a friend or using a buy now, pay later app, it’s important to have a clear understanding of your affordability when it comes to making repayments. Never agree to borrow money in any form from any lender until you’re sure that you can afford to make the expected repayments on time.
  • Consider the future: It’s important to consider the future when borrowing money, as nobody knows just what is going to happen. You will get more peace of mind when borrowing if you have a contingency plan in place for what you might do if you were to lose your job or earn a reduced income for any reason, for example.

Sometimes, needing a short-term injection of cash is unavoidable. If you’re in this situation, the above options are all ideal ways to get the cash you need.