If you know the basics of your personal finance, you will know that the cheapest loan available will be from your friends and family. But a lot, if not most, people will never consider this. They will assume this as coercion if they think about it at all. However, there are times when this can be your best route to solve your financial problems.
But there is a downside, and it can be a disaster for you. Because there is no faster way to lose friends and cause family disputes than if you borrow money and fail to pay it back by the due date. You balance your happiness to financial benefits.
So you have to be careful. If you are lucky, you deal with people who truly believe in you and who will not hesitate to lend money to you. So it’s up to you to take precautions.
Make sure you can repay the loan on the due date, or on the specified monthly date, whatever payment method you approve.
Try and borrow money from those who can afford it and who won’t miss the number on the day. You really don’t want to create financial pressure for someone because they have lent money to you.
It would be better to keep any loan on a kind of official footing. Compile documents that detail your commitment and sign it. Always offer to pay interest on loans and if it is rejected, buy a gift after the loan is fully repaid. Never buy him a prize with money, they lend you.
And to repeat it, really sure you can pay a loan on the maturity date, or on the specified monthly date, the payment method you agree.
Loans from friends or family can be very profitable but it comes with the risk of losing your friends or causing a bad feeling in your family. Make sure you know the basics of your personal finance and understand all the risks, benefits, and options open for you before you start.