In some ways, borrowing money from friends and family is the best deal you can get on a loan. People who care about you will probably not disappoint you if you are in need. They probably also give you enough time to pay it back and make it easy for you if you miss a payment. Sometimes they don’t even ask for interest.
The disadvantage is that hitting friends and relatives for money can tax the relationship. If you often borrow money, take too long to repay it, or don’t pay it back at all, they will definitely begin to feel. And if you keep the same people stiff, they will sooner or later keep their feet in the air and say that the couch is closed.
Try to be an attentive borrower to prevent this problem. Never let friends and family think that you take them and their money for granted.
Here are different rules to keep in mind:
- Explain the situation . Let your friends and family know what you are borrowing the money for. After all, it’s their money, so they have the right to know. Mom and Dad may be willing to give you a loan to cover emergency medical expenses, but may not be happy to pay for a ski vacation.
- Keep it small . Don’t ask friends and family for more than they can really afford to borrow. Also do not borrow more than you can pay to repay.
- Pay back quickly . Work out a schedule of payments that you can afford – and be careful to make those payments on time.
- Including interest . Borrowing money is not free. When a friend lends you $ 200, that is $ 200 they no longer have in their bank account. So it is only fair to repay them at least as much interest as they would have earned by leaving that money in the bank.
- Put it in writing . Have a written agreement that outlines your timeline for paying off the loan and the interest you will pay. This makes the terms of your agreement clear and prevents misunderstandings that could harm your relationship.
- Thank you . Don’t forget to thank the lender. A loan is a pleasure, so show your appreciation just like for anything else.