If you often find yourself stressed over your bank account during an emergency, consider yourself fortunate to be in 2025, where borrowing options are more abundant than ever. Unlike the 90s, today you have various choices, like traditional banks that assess your credit score to allocate loans, ethical online lenders ideal for emergencies, and even local councils and services that offer financial assistance in tough times.
But with so many options, the real challenge is knowing which loan is the best fit for you in an emergency. Should you borrow from friends or take advantage of Salad’s emergency loans? If these thoughts feel familiar to you, you’re not alone. There are many options available for borrowing, each with its own set of advantages and disadvantages.
This guide is designed to cut through all the noise and provide you with smart borrowing tips to help you make a smart borrowing decision in 2025.
1. Know the Real Reason You’re Borrowing
This should be obvious, but many people skip this step. Borrowing to cover your bills might seem like a good reason, but it’s not enough. Is the late payment fee greater than the interest you might pay? If yes, you should go ahead and borrow, and if not, isn’t it better to wait until your next payday?
Once you’re honest with yourself about why you’re borrowing and whether it’s something that can wait, you’ll be able to make a clearer borrowing decision.
2. Compare More Than Just APR
In 2025, APR still matters, but it shouldn’t be the only thing that guides your decision. Some low-APR loans may have early repayment fees or hidden charges, while others may offer flexible repayment schedules that increase after the introductory period ends. It’s very important to look at the fine print closely and understand the true cost of your borrowing.
3. Think About Your Future Self
You have borrowed some money to solve a problem today. However, your future self is going to be paying the cost for it with repayments. It’s important to consider your current and future situation when agreeing on your repayment terms.
If you intend to make another large financial purchase in the future, you may have to wait until this loan is paid off. This is especially true if you don’t have a fixed income, as it becomes more important to ensure that you can handle the repayments for the loans you have taken.
4. Avoid Borrowing Just to Delay the Problem
When juggling work, family, and bills, it’s tempting to push the financial pressure down the road by borrowing a bit more. If you already have loans, you might consider taking a larger loan to pay off the first one. However, these are just temporary fixes and don’t address the root cause of your financial strain.
In times like these, it’s better to step back and take a hard look at where your money is going. Assess how you can budget effectively to both maintain your lifestyle and pay down your debt. It’s not easy and may require some sacrifices, but it’s absolutely doable.
5. Check Who You’re Borrowing From
Not all the lenders you see online are concerned about your best interests. They might attract you with offers but also try to slip unfavourable conditions in the fine print or hidden charges. You need to be extra alert when borrowing from online lenders. Take the time to check independent reviews and thoroughly review the loan documents, even if it means going over them multiple times.
A good starting point is to verify whether the lender is regulated by the Financial Conduct Authority (FCA), which ensures they adhere to proper standards.
6. Consider Alternative Support First
As a smart borrower, loans should not be your first option when facing financial trouble. Before considering a loan, take the time to explore other options such as grants, employer hardship funds, or local council support.
There may also be options available that don’t require interest or repayment, such as certain grants. It’s worth investigating all these alternatives before deciding to apply for a loan.
7. Build a Repayment Buffer
You’ve carefully reviewed everything and are confident that you can make your repayments on time each month. However, a few months later, another emergency arises, and you find that the money you set aside for repayments has been used to cover it.
In situations like this, it’s wise to set aside one or two installments as a buffer. You never know when another unexpected expense might pop up, and having a financial cushion can help you stay on track with your repayments.
Summing It Up
Borrowing money in 2025 doesn’t have to come with shame. It becomes a tool that you can rely on in case of emergencies. However, that can only happen when you borrow smartly by considering all the options available.
Keep these tips in mind so that the next time you’re in an emergency and have to make a quick borrowing decision, you can make sure it’s the right one.