How to Borrow Money for a Down Payment
If a deal comes along that you can't refuse, but you do not have the money on hand to make at least a down payment, look for alternative options for payment. Depending on your credit rating, you have a variety of options including borrowing the money from a private and commercial lender. Whether you want to make a down payment for a house, vehicle or other expensive item, you can obtain the money you need to purchase the item you want.
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Instructions
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Apply for a personal loan. When evaluating a personal loan application, most personal loan lenders look for minimal pre-existing debt and employment at a full-time job. Apply in person or online. Authorize the lender to request, view and print your reports using an online credit reporting service.
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Borrow money from a relative or close friend, if you have substantial debt and cannot obtain a personal loan from a lender. Draw up a loan agreement and repayment plan. Outline the terms and conditions of the loan including the interest rate, dates of payments and what penalty fees, if any, will occur if a payment is 30 days late. Have the documents notarized by a state notary official.
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Apply for a payday loan from an accredited payday lender. Complete a short application with your full name, Social Security number, date of birth, state of residence and driver's license number. State laws determine the allowable loan level for each transaction, which can vary from $1000 to $250. (See Resources for a list of state lending laws.) Payday loans typically carry a higher interest rate than personal and private loans.
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Borrow money against a retirement account. While not an option for everyone -- primarily those who are near the age of retirement -- you can borrow against a retirement account to obtain money for a down payment. Contact your employer's human resource department or 401(k) manager to inquire about minimum loan levels for each withdrawal and early withdrawal penalty fees.
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Tips & Warnings
Select a payday lender accredited by the Better Business Bureau.
The least desirable way to obtain money for a down payment is to withdraw money from a pension or retirement account. According to Cash Money Life, withdrawing money from a 401(k) account could result in hefty taxes, early withdrawal penalty fees, a reduction in compound interest and market losses.
