How Should I Borrow from Family and Friends without Losing the Love

How to Borrow From Family and FriendsThe idea of asking for a handout from family or friends would make most of us run for the hills. But if done right, getting a loan from loved ones can be a cost effective and convenient way of borrowing.

There are many reasons why people choose to avoid banks, credit cards and other lenders and instead ask for a loan from friends and from the ‘Bank of Mum and Dad’.

It could be that you have been refused credit elsewhere or you simply want to avoid interest costs.

Whatever the reason, this type of loan is on the increase since the credit crunch hit everyone’s pockets. A survey by Aviva found that around 15% of families in Britain have borrowed from each other or friends at some point.

However, mixing money with family can be tricky – if the borrower fails to pay it back, it can have a catastrophic impact on relationships.

However, if the trust between the lender and the borrower is strong, then it doesn’t have to lead to awkward family get-togethers.

Mixing money with family can be tricky - if the borrower fails to pay it back.Click To Tweet

Let’s consider the pros and cons of borrowing money from family and friends:

Advantages of Borrowing Money from Family and Friends

  • The majority of loans given by family and friends are interest free so you can avoid falling into deeper debt.
  • If you miss a payment, your friends and family probably won’t impose any financial penalties and it won’t affect your credit score (although it may damage your relationship so you need to tread carefully).

Disadvantages of Borrowing Money from Family and Friends

  • If you fail to pay the money back – 9 times out of 10 it will cause a rift between you and your loved one. Also, if it’s not done properly, this type of borrowing can cause intense bad feeling which can have repercussions through your personal network.
  • Despite outward appearances, your family member or friend may not be financially able to lend you money. This can create the awkward situation of them having to explain their finances and refuse your request – further causing bad feeling.

Therefore, borrowing from family and friends can be a minefield. You need to carefully consider all options and outcomes before you ask.

If you do decide to go ahead, follow our handy tips to help you make sure everyone is comfortable with the loan.

How to Borrow from Family and Friends (without losing the love)

Here are seven tips to help you borrow from family and friends – the right way

1. Can they Afford It?

Ok, you can’t go delving into people’s finances. But you should be able to work out who is able to lend money and who is not. Your granny who lives alone on a state pension and struggles to pay the bills for her tiny house is NOT the person to ask.

It has to be someone who is financially able, so that loaning you money won’t impact on their own living standards.

2. Work out a Repayment Plan

How much can you afford to pay back each month? How and when will you pay the loan back? Put all of this information onto a spreadsheet which details your monthly incomings and outgoings and when you will make the payment.

Show this to your friend or family member. It will make them feel secure that you are taking the loan repayments seriously and you’re not simply begging for a handout. Don’t just ask for an envelope full of cash without showing evidence of how you are going to pay it back.

3. Get it in Writing

As well as your spreadsheet you can get a legally-binding written agreement drawn up detailing the loan and repayment, which both lender and borrower can sign.

Consult the Citizens Advice Bureau or Step Change debt charity on how best to go about this. A written contract will give the lender peace of mind.

4. Stick to Cash or Bank Transfer

Never ask a friend or family member to take out a loan or credit card on your behalf. You are risking them getting into debt and this could seriously affect their own financial situation.

If they agree to lend you money, ask them to transfer it from their bank account into yours. Or give it to you in cash.

5. Borrow for the Right Reasons…

You may dream of owning a yacht or a £2,600 Fendi handbag but these are not good reasons to ask for money from friends or family.

Motivations for approaching the Bank of Mum/Dad/Sibling/Friend could include start-up cash for a new business, home renovations, help with a deposit on a house, buying a much-needed car or help with getting out of high interest debt.

The lender shouldn’t expect minute-by-minute updates on how you are spending the cash. But you will have a better chance of them saying ‘yes’ if the money is for something sensible.

6. Discuss Everything Openly

Problems arise if your friends and family are unsure about your true situation. Don’t be vague about what the money is for, if you need help to get out high interest debt or are finding it hard to feed your kids – talk to your friend or family member about it.

They may be able to help you emotionally as well as financially. So reach out and make sure everyone understands what is happening in your life.

7. And finally – be the Bigger Person if they Say NO.

You may feel disgruntled if your friend or family member says no to your request, especially if you think they can afford it.

However close you are, money is an emotive subject and you might not have understood their financial or personal situation. Don’t let their refusal ruin your relationship – remember, they may have their own problems.

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Over to You

Have you ever taken a loan from a family or friends? How did it work out? Share with us, our readers would love to read your tips on this emotional subject.

This post is part of the Debt Management series, you can read all posts in the series here.















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  1. I wouldn’t advice borrowing money from family, like you mentioned, it can end up disastrously. Actually I wouldn’t advice borrowing money full stop, unless it’s absolutely necessary. It’s tricky isn’t it? I guess it’s really best to try and avoid the situation as much as we can by saving. But yes, I get it, that to some, this is also difficult 🙁

  2. These are great tips – we recently borrowed money from family to buy our home and executed a lot of these points and so far so good!

  3. If we were desperate then I guess we’d ask family but never friends. Our families support each other but I’d still want it to be more formal with a clear repayment plan in place so that we know where we stand. There’s some great tips here

  4. I hate the thought of asking family or friends to help us out with money. I know it makes more sense to ask than get a credit card though.

  5. To be honest I rather get a loan or go overdraft on my credit card than ask for money. No one really likes to borrow money to other people even if they are family, and I would hate to be that person that asks for money.

  6. I don’t like asking money to family or friends. I just hate this idea but I can understand that its the easiest and less complicated way than going to a bank.

  7. I think borrowing money from a family member can be a bit of a tricky situation, like you said it can cause a rift. But these tips can really help, especially getting it in writing.

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