If you are strapped for cash, you may be considering borrowing money from a family member or one of your friends. For a lot of people, this is the obvious place to turn when they need money because they would rather ask people they love then resort to a lender. However, borrowing money from family and friends is not always as straightforward as it seems, and the last thing you want to do is ruin a good relationship over cash. So, let’s take a look at some important rules when borrowing money from friends and family.
Pay the loan off early – When borrowing money from family and friends, it is always good to agree to a date that is extremely comfortable. For example, if you know that you can pay the money back in two weeks time, why not tell your friend or family member that you will pay them back in a month? That way, you reduce the risk of delaying on the repayment while also making your loved one happy when you pay them back early.
Set up a loan document – This does not mean that you need to have a legal paper drawn up, although if the money is a large amount, you should offer this as an option. Either way, acting like the loan is a legal relationship and a formal one is a good idea. This means you will have more chance of sticking to it.
Don’t negotiate – Trying to negotiate the deal that your loved one has offered you is not a good idea. Asking for more money or more leeway may offend your friend or family member and it can often come across as you being ungrateful.
Pay interest – It is likely that your friend or family member will tell you they don’t want any interest paid to them. However, you should definitely offer this, and if they refuse, try to give them some interest when you make your final repayment. Not only does this show how thankful you are, but it will help you to deal with money management issues better. After all, you’d never get an interest-free loan off a lender!
Explore all options – Last but not least, it is important to explore all options when you are considering borrowing money. There are many different online loans available today, and you may find that this is actually better for your situation, especially if you have already borrowed money from family members and friends countless times before.
So there you have it: some important rules to follow when borrowing money from a family member or a close friend. If you follow the advice that has been provided, you can make sure that everything goes as smoothly as possible so that money does not get in the way of an important relationship.