Maybe you have an unexpected expense, salary may be taking too long to drop or you may not have quite enough money saved for payment of your dream car.
Whatever the reason, if you’re in a tight financial situation, you might consider borrowing money, but is borrowing from a friend or family the best option?
There’s more than money to consider before you ask loved ones to help you out, in this post, we will evaluate the things to consider, and recommend a better option of where to borrow money – especially if you need it urgently.
When money is involved in a relationship, feelings of resentment, trust issues, and differences in opinion can result.
Besides, nearly three-quarters of people who borrow money from friends or family never pay back everything they borrow.
It’s understandable why many people don’t recommend loaning money to friends and relatives. Not only are the loans not likely to get repaid, but it can cause relationships to deteriorate.
Before you borrow money from family, friends or even financial institutions it is important that you get it right from the beginning.
Look at all Your Options First
Consider all your alternatives and borrowing options before asking friends or family for a loan. There might be ways to address your financial situation without borrowing from the loved ones in your life.
Some alternative options include:
Cut expenses wherever possible
Create a budget and stick to it
Get a side gig or second job
Ask for a raise from your employer
Negotiate your current financial obligations (interest rates and repayment terms with your existing lenders)
Check for personal loan options at financial institutions (recommended because it is faster than all other methods listed, and we can help you get started in minutes)
Pros of Borrowing Money from Loved Ones
More flexible terms. You can work out the details of the terms of the loan with your friend or family member. Compared to a financial institution, you could have a more flexible repayment schedule, interest rate (if any), and length of repayment.
You see? Fewer hoops to jump through. Your friend or family member may want evidence you can repay the loan. Still, they aren’t as likely to have the stringent requirements of a financial institution.
Cons of Borrowing Money from Loved Ones
Causes stress: If you’re asking a friend or family member for a loan, you’re already under some degree of financial stress. Add to that the fact that you’re asking someone close to you for a loan, and you have social stress too.
It can be hard on relationships: When you add a financial transaction to a relationship, it shifts the dynamics. While it is possible for the relationship to continue, or even flourish, there is no guarantee. If the money causes resentment, guilt, or shifts the balance of power too much, it’s ripe for contention.
It could become a financial burden for your friends or family. Your loved ones might need the money you borrow sooner than you can repay it. And that can lead to some high level of inconvenience between the two of you.
Reasons Why Taking a Loan from A Financial Institution Might Be Your Best Option
In order not to lose urgent opportunities, get embarrassed by your landlord over rent, or see your kids stay away from school, a smart decision would be to take a loan from a financial institution.
Not only does a loan make more financial sense, it is the perfect facility to assist you during planned or unplanned events when time is of essence, it also helps you avoid the cons highlighted above from borrowing from loved ones.
The next thing to think about is which loan company has got the best offer for you.
Culled from Bestnaija.ng
