When it comes to most things in life, there’s a smart way to do it and a not-so-smart way, especially when it comes to money. In no particular order, here are some not-so-smart ways to borrow money:

  • Payday Loans – These loans specialize in serving those with few other options. Interest can reach 10-20% per month; annualized rates can reach 300-400%.
  • Pawn Shops – At these businesses, you give them an item of value as collateral, and they give you an loan at a rate of 5-25% per month, depending on your state’s laws.
  • Cash Advances – Most credit cards offer cash advances in addition to simply making purchases. These advances often come with an up-front fee as well as 25% interest. The worst part of all is that the interest starts accruing immediately.
  • Buy Here Pay Here – Interest rates on these dealer-financed loans average 24%, which is three to four times the typical car loan.
  • Borrowing from Friends or Family – The interest rate on these loans might be nil, but the risk to future relationships isn’t usually worth the risk.

While the above situations are typically not smart, there are some alternatives that are a great idea:

  • Emergency Fund – Having emergency savings is a great idea, usually taking away the need to borrow money in the first place.
  • Maintaining Good Credit – Having a good credit score gives you options when you are in a situation where you have to borrow. Make sure you shop those options to get the best rates.

Bottom line, there are times in life where we need some help. Planning ahead, beefing up your savings, and keeping a good credit score will reduce the need to enter a less-than-ideal borrowing scenario.