Everything there is to know about borrowing friends and family
Money makes the world go round, and people have been borrowing money for hundreds of years. This has led to a massive lending market, accessed by hundreds of millions of people from all around the world on a yearly basis. At this moment in time, there are numerous types of loans that people can get, including personal loans from banks, mortgage loans, stock loans, payday loans and more.
Others choose to borrow money from friends and family, as sometimes, this may seem like a better alternative for them, when it comes down to facing a difficult financial situation. However, over the years, numerous specialists have recommended people to stop borrowing money from their friends and families, as doing so can actually lead to a wide variety of issues.
To put things better into perspective, the process of lending money from either your friends or family becomes difficult from the moment you make your request. Most of the times, you will indeed find someone to help, but at the moment you do so, chances are that the relationship between you and the set person will deteriorate. This normally happens for various reasons, including an increasing lack of trust, possible delays of payment, but also turning the friendship into a lender and borrower relationship.
To put things better into perspective, failing to give the money back on time to a bank, or financial institutions will not bring about any psychological repercussions, but rather a few more fees, and a mail outlining to further course of action. With friendship on the other side of the spectrum, chances are that both your friends and family will start worrying about their money, and demand it back as soon as possible .
Regardless of the type of loan that you need, chances are that there’s something similar being offered on the market by an agency.
Your lending alternatives, designed to keep you from bothering your friends and family
For emergency loans, you can always get in touch with a payday lender. These agencies offer loans of a few hundred dollars to people who can show proof of employment, and are willing to sign a contract that requires them to pay back the loan within a few weeks, or within a month. Interest rates are generally quite high, yet the efficiency of the process, alongside with the money being given may make it worth it. Of course, leaving payday loan by payday loan isn’t a good idea either.
For personal, bigger loans, you can always get in touch with a bank. Do keep in mind the fact that getting a bigger loan also requires you to have a good credit score. Most of the times, this may check out, but in case you don’t have a very good credit score, then it is recommended to work on trying to fix it, rather than borrowing more money and placing yourself deeper into debt, rather than escaping it.
For loans needed to build a house, you can always consider the idea of a mortgage loan. These loans are meant to be used both when constructing, and when purchasing an actual, already-built house. The main advantage is the large sum of money that can be offered, whereas the disadvantage is that you’ll also have to put the set property on mortgage, as collateral. With this in mind, if you do not pay the debt back on time, then the bank and/or financial institution that you have contracted the loan from, can legally seize and sell your property to the higher bidder, to cover their losses. Therefore, it is essential that you make sure you’ll be able to pay the debt back on time, and only purchase properties that you can afford, without a loan, over the course of several months.
Based on everything that has been outlined so far, it should be understood that constantly borrowing money from friends and family can put a heavy strain on your relationship, thus leading to fights, deterioration of friendship and other unpleasant events. If you are 100% sure that you can pay the money back on time, and if you have a good relationship with the person that you’re thinking about borrowing from, this form of borrowing may be accepted, although it remains dangerous. This represents the main reason why we have also gone ahead and showcased some of the main alternatives to borrowing money from friends and families. Regardless of whether you need some emergency funds for an unforeseen event that has appeared in your life, or more money for dealing with anything else, there is a solution that doesn’t require signing over your friendship, but rather just a simple contract, thus making things better from all the points of view.