Why Not To Borrow from Family or Friends
There are several pros and cons of borrowing money from family and friends. It could be tempting but you need to think carefully about a few things such as if you can afford to repay on time and what if you are unable to repay. However, borrowing from a friend or a family can be helpful whenever you are in need of emergency money and have no time to waste on time consuming formalities or do not wish to pay high interest rates. If both parties are sure, borrowing will not harm a relationship even if you do not make timely repayment. Normally you can borrow from a family member without any interest or fee. But be aware because if you borrow from a friend and do not return, it could end your friendship. There are several reasons why you should not borrow from friends or family.
Money borrowed from family and friend tends to be open-ended loans. From a borrower’s perspective such loans may not be seen as a priority. Generally, there will be no binding agreements, no set timeline for repayments, and no interest. Borrowers do not know when to repay and lenders do not know when the money will be returned. Besides, when it comes to borrowing from friends and family, we often tend to neglect the formality in dealing with procedures like this. This will leave both the parties in limbo. Such uncertainly can be stressful for both the lender and the borrower. Thus, even if you borrow a loan from a friend or family, set a schedule for repaying the loan. If you are not provided with a final deadline for total repayment of the loan you may not take it seriously and fail to make monthly payments. This might not end up in good terms.
Borrowing Such Loans Can Be A Step Back For Relationships
Requesting for a loan from a friend or family can be very awkward. What will you do if they refuse? Even if they offer you the money you need, is it going to affect your relationship? Once you have borrowed from someone known you are bound to please the lender as a gesture of gratitude and it will become difficult to oppose with them in anyway. No matter how good your relationship is with the lender, due to lending it may cause issues in the lender’s own life someday. Based on their financial standing, they too may have some plans.
Short Term Solution
When you borrow money from friends and family it is less likely that you will be able to borrow exactly the amount of money you are in need of. Borrowing less than what you need will give you short term relief and the same problem may occur again. You may then have to go back asking for more money. You should avoid such repetitive nature and check out for other solutions.
Your Financial Issues May Worsen And You May Lose The Relationship
There is a chance that you could lose your friendship and your financial struggles worsen. Borrowing from a friend or relative is a matter of trust between people and not being able to see the influence of repayments and how one spends the money will leave both the parties vulnerable to conflict and disagreements. If you are asking for money from friends or family be ready to face the tension between you and the lender. It may also cause guilt and anger.
When borrowing from friends and family you may not realize the urgency to repay the loan. Without any deadline and not having to face any consequences for not repaying, such as late payments, higher interest, or negative impact on a credit score, you may not give repayment a priority. Without any such threat of penalties, borrower will never take the loan seriously or put any urgency about repaying the money.