As humans, you like to approach and seek money from friends or family first, however they may or may not like your act of borrowing. Money has also been the determinant of many crucial relationships by judging its foundation. So even when money forms an important part of life, we still judge when someone’s fallen short of it. This is exactly why it’s so important to have a trusted group of individuals to lend valuable tips of borrowing.
And obviously you have your reasons to be squared up in a financial crisis, asking for extra money. The reasons could be as basic as house repairs to, medical consultation to consolidating debts or organizing wedding expenses. We extend our cash requests in expectation of exemption from interest rates, rigid repayment plans, etc.
Here are the 5 reasons to follow when lending money to friends:
- Lack of communication– Typically, when an individual approaches a friend or family member also, when there’s no documentation ready in place, conflicts do crop up. This also lends room for miscommunications and misunderstandings which lasts longer sometimes. Let’s say you already have a debt, then a family friend may not be convinced to lend more. Or you’ve maybe you’ve repayment defaults to your credit, this will also discourage a close friend from lending money at all. All these expectations without proper documents can create rifts.
- Legal consequences– Ofcourse, when you work with a legal entity, there’s a formal agreement for signing. This broadly helps to keep all keep all confusion away. So, for a certain amount of cash paid, an equivalent is paid back with an interest. However, a friend or family member may have their personal motives to tweak the agreed terms as per convenience.
- Wrong lending decisions: A friend may like to know the purpose of your borrowings before taking a final call. Infact, they can also try to intimidate your decision in favor or against your choices. And in turn will determine their final lending decision. Let’s say you wanted to replace your old refrigerator or maybe reduce your spending on luxury items. However, this close one may influence you to reduce his own lending.
- Creates Friction– Another important repercussion is that it could easily create differences between close friends or family. A non-repayment or small repayment can diffuse relationships. Similarly, a lender may feel mighty enough and start acting differently towards you.
- Frivolous use of money- Perhaps, you’ve put up a poker face to your loved ones for money & your intentions never been to make a repayment. This will not only impact your personal relationships but also spread a bad mouth about your image & doings for future. So, better avoid any frivolous use of the borrowed money.
Its important to understand that friendships are priceless and shouldn’t be used for personal gains. Else, it can create a lifetime sourness. So, before arriving at a decision, weigh all the pros and cons of borrowing from friends and family. Stay mindful of the sanctity of friendship in comparison to money matters.
So you can consider a loan as an alternative to raise funds for your financial dailies. The best advice is to stay within your financial boundaries & get a personal loan at maximum. If you don’t want to get into ugly fights while discussing debt & lending, then it’s best to go to a leading personal finance advisor instead of beating around the bush.