| Loan Option | Pros | Cons | Tip |
Auto equity
(refinancing) | Fairly easy approval if there is adequate equity. | Higher interest rate than a new auto loan. Equity (loan to value) ratio decreases. | Be sure to get an auto refinance loan, not a car title loan. |
| Balance transfer | Lower interest rate. | You'll have to apply for a new credit card. Watch for fees and balance transfer restrictions. | Do not use a balance transfer credit card to make new purchases. Use it to payoff other credit card debts. |
Family or friends How to calculate monthly note and interest | Lower or no interest, and personalized payback terms. | Puts your relationship in danger. | Sign a loan agreement that details the amount borrowed, interest, monthly payments, due dates, etc. |
Home equity
(refinancing) | Lower interest rate, and the interest may be tax deductible. | Increases the amount owed on the loan, and puts the house at risk. Many borrowers run up debt again. | Only borrow the amount necessary and do not borrow the full equity value. |
| Payday loan | Bad credit people approved with no credit check. | Short term loan with high interest rate when fee is compared to other lines of credit. | Repay the payday loan immediately and do not roll-over. |
| Personal loan | Lower interest rate and long term loan period. | Typically requires good credit, and may require collateral. | Use the loan to payoff high interest debt, and don't run up new debt. |
Person to Person loan How to calculate monthly note and interest | Interest rate may be lower. | Use the funds to payoff debt, and do not rack up more debt while repaying the loan. | Browse the internet for personal lender sites. Find out the fees and read all terms & conditions before signing. |
| 401(k) | Good interest rate | Possible taxes and penalties on amount borrowed if you don't repay within five years. May have to pay back in full if you lose your job. Less money compounded for retirement. | Avoid this option since it puts your retirement plans in danger. Consider only if you're far ahead of your savings goal and your situation is desperate. |
