We’ve all been there. We need money, and we don’t want to go through the hassle of applying for a loan or going to a bank. Here are the top 5 things that you should do when borrowing from those close to you.
1. Establish a Repayment Plan and Stick to It
Try sitting down and figuring out how much money you will be able to pay back each month, and then stick to it. Ask them if they want to charge an interest rate to show you’re serious and have given paying them back a lot of thought.
2. Don’t Borrow More Money Than You Need
It’s tempting to borrow as much money as possible, but this can lead to problems down the road. When you borrow more money than you need, you’re taking on more debt and are more likely to miss payments. Treat the loan like a bank transaction. Just because you’re borrowing from someone close to you, doesn’t mean you shouldn’t take it seriously.
3. Pay Back Everything, and Faster if You Can
After establishing a repayment plan, work to stay on schedule and ahead of schedule if you can. If you can’t be early every month, that’s fine, all you want to do here is show that you’re serious about repaying the loan and that you aren’t taking the repayment plan for granted. Also, if you decided on interest, the longer you wait to pay back the money, the more you’ll have to pay.
4. Keep Your Borrowing Discreet
It’s important to keep your borrowing discreet. Just because a mate or a family member lends you money, doesn’t mean they want other people to know. Privacy is key, mainly to avoid others asking for the same thing, and from disclosing your lender’s financial situation.
5. Know Who to Ask
Keep in mind that not everyone is in the place to lend money. Make sure you’re somewhat aware of the potential lender’s current situation. You also only want to ask those you have a good relationship with, to increase the likelihood of getting the funds.
Borrowing may be hard to do, but if you follow these 5 tips, you may find that it can be painless. What you want to do is show your friend or family member that you’re a responsible and respectful borrower. Be mindful that people are often more likely to lend money to those they know will pay it back.
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