Borrowing Money From Family – The Benefits

I can admit, there have been a few times in life that I needed to borrow money. Most of us have been in that situation a time or two. When it doesn’t make sense to borrow from a bank or that isn’t an option…what do you do? Many people turn to the idea of borrowing money from family. For some, it turns out to be a great option and a solution to their problems. For others it poses a risk and creates more problems than it is worth. Today we will look at the benefits of borrowing money from a family member. Tomorrow we will cover some of the risks.

Is This The Best Option – The Benefits Of Borrowing Money From Family

There are a few reasons that borrowing money from a family member is the best option. This would include saving money on interest and having no need for a credit check. Another reason many people borrow from a family member is because it is their only option. Maybe this is because the bank won’t lend them money. It could be due to bad credit, or maybe you don’t have credit built up yet. Lack of a job or time on a job could be a problem as well.

What Are The Expectations?

How will you pay back this money? One of the most important things to be honest about is a plan for paying it back. Only commit to an amount of money you know you can pay back. How much you are borrowing, over what period of time and when you will make payments should all be laid out from the start. Be honest and forthright if something comes up that prevents you from paying your payments on time. If you are borrowing money from a family member to save on interest, make sure this is the best decision. Your commitment to pay back a family member should be just as strong as your commitment to pay the bank back.

How Will You Track This And Communicate About The Loan?

This likely depends on who it is you are borrowing from and what the terms of the loan are. I have lent my younger sister money before and we were clear on how she would pay it back. Each time she made a payment we communicated the balance back and forth via email. This kept us on the same page and both of us knew what was owed at all times. You do not need an elaborate system, but you should have one!

Stay tuned for two more blogs when it comes to borrowing money from family. Today we discussed the benefits and our next two blogs will explore the risks and then we will give you some advice if you decide to lend out money in the future!