How To Ask For A Loan From Friends or Family
Because of the tedious process of acquiring personal loans from banks, more people are resorting to family and friends for financial support. Banks prove to impose rigorous requirements to avail loans such that when compared to borrowing from family, the difficulty borrowing from banks appears to be continental. However, borrowing from family and friends should not be taken lightly. In order to protecting their interests and your relationship, certain guidelines have to be followed, no matter how close your relationship is.
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Ways To Ask For Personal Loan
Just because you plan to borrow from family or friends does not mean that you can just casually approach them about your financial concern. Remember, you are going to make a request for financial accommodation and this calls for a relationship on a business level. You can start by approaching your family member or friend in an informally and subtly inform that person your situation. If your family or friend is interested in helping you, you can set another date to discuss this matter in a business-like manner. There, you can present your situation, laid out plan, and proposed payment scheme. For the purposes of a loan, the best way to approach is always in person. If you are serious about securing a loan from family or friends, then you have to tell them personally about it. Should this be impossible, then talking to them over the phone would be the second best option. Explain to your family or friend what they really are getting into, so do not cut corners by sugarcoating your proposal. Usually, people close to you would not mind lending you some money if they have the means to do it. But you have to explicitly inform them why and until when they will be parting with their hard earned money.
Signed Contracts
Because of the proximity of your relationship, family or friends may refuse to further solidify your agreement through written contracts. But you cannot rely on human memory alone as it is fleeting. To make sure that you got your terms covered, put it in writing. It does not have to be a lengthy contract full of legal jargons. You can draft a simple promissory note for your debtor. This way, you are showing your earnestness to pay them when the debt becomes due and to protect your debtor’s and your interests. Should your family or friend shy away from such a document, kindly explain that this would be for their best interest. If you are borrowing a bigger amount of money and you have sufficient assets, you can offer your assets as collateral for your loan. In this manner, both parties are protected.
Other Options
While borrowing from family and friends is arguably the most convenient way of securing personal loans, you can still avail other options if borrowing from the former proves to be difficult. Choices that are open to you include debt consolidation, debt settlement, bank loans, and secured credit cards. Debt consolidation will allow you to settle all your debts in lower interests by amassing all your debts in just one bill which you will pay monthly. Debt settlement will almost cut your debt to half the principal amount in which you will make a one-time payment. You can also apply for a personal loan to banks although this will include interest charges. After all, that is how banks earn money. Applying for secured credit card will enable you to purchase commodities and pay for necessities without the hassle of an incoming bill. This will improve your credit score too.
Video: Friends and family can be a source of borrowing money
Dos and Don’ts
Never start with a phone call. If you are seriously intent in borrowing from family and friends, you have to present that idea in person. This allows you to explain clearly to your future creditor why you need a personal loan.
Insist on writing it down. Although the essence of your relationship with family and friends is trust, you should not take that relationship lightly by keeping your agreement verbal. Disagreements over finances are some of the most fatal things that can destroy your relationship with people close to you. The best way to preserve this in spite of your loan is to put it in writing and make sure both of you have copies.
Make sure you pay on time. Do not take your relationship for granted. Instead, persevere to protect it by keeping your word in making payments on time. If you have the means to pay it in full, then do so. Your creditor might need it for something important.