The Dos and Don’ts of Borrowing Money From Family and Friends – let’s explore.
Borrowing money from family and friends can be a good way of keeping yourself financially afloat during a particularly tight period. This type of borrowing can be common amongst those who are close to each other, and can provide a number of benefits that some lenders of regulated loans cannot.
However, while borrowing money this way can provide certain benefits, it’s important to note that there are also a few negatives you’ll have to watch out for.
Why Borrow Money From Family or Friends?
Borrowing money from friends can come with its benefits. When borrowing money in this way, you’ll most likely be faced with less stringent (if any) eligibility criteria. This means that if you have an adverse credit history, you’re still likely to have the money lent to you, as a family member or close friend won’t have the same strict rules to abide by as do regulated lenders.
In addition to this, borrowing money from a family member or friend also often means that you won’t be charged interest as with the typical loan from a regulated lender. This means that this form of borrowing could end up being cheaper than taking out a loan with a professional lender.
Borrowing money from someone that’s close to you can also mean you won’t face early repayment charges for paying off the loan early, as can sometimes be the case with regulated lenders, and if you miss a repayment by a few days or so, a family member or friend may be a bit more lenient on this than other more standard types of borrowing.
Things to Look Out for When Borrowing Money From Family or Friends
While borrowing money from a friend or family member can come with various benefits, it’s also important to abide by their requirements, helping to make them feel more comfortable during the borrowing period.
Failure to meet your friend or family members’ requirements when borrowing money off of them can cause conflict between the two of you, and depending on the situation, could even damage your relationship with them.
Before borrowing money from someone that’s close to you, as with borrowing in any capacity, it’s important to ensure that you can afford the loan, and will be able to make the repayments on time.
In addition to this, it’s also important to be clear on the repayment terms, when you will be able to pay off the loan, and also what you are using the loan for. If you’re not honest on what you’re going to be spending the money on, or fail to repay the money back on time, this can make your friend or family member uncomfortable and cause conflict between the two of you.
Whenever you borrow money from someone close to you, it’s important to be as open and honest as possible – as this can help to make the borrowing experience as smooth and easy-going as possible.
Alternative Borrowing Methods
Borrowing money from family or friends can come with its benefits. However, many may find those that are close to them are uncomfortable lending the amount that’s being asked for, or simply might not have the money to hand themselves.
You might wish to look at using a credit union, which is a community based lending model set up to help people within the local area. The loans can take a few days to come through, but with APRs starting 26%, they are very low cost and do not charge any late fees either.
You can also look at selling some junk including clothes and board games from around the home either online, eBay or at your local car boot sale – and there could easily be hundreds of pounds lying in your bedroom cupboards!
The Dos and Don’ts of Borrowing Money From Family and Friends is a feature post