6 Reasons to Say No to Borrowing Money from Friends or Relatives

When money problems arise, a person may turn to family and friends for help. Doing so tends to be a mistake. What are some common reasons why a person should never borrow funds from someone they know?

Control

When one person borrows from a close friend or family member, he or she may feel as if this person now has control over their life. If the lender makes a suggestion, the borrower may feel obligated to follow this advice until the loan is repaid. As a result, he or she feels as if they have less control over their life. By taking out a loan through a conventional lender, this problem can be avoided. Visit loanreviewhq.com to learn more about the borrowing options available today.


Financial Strain

Stop and consider whether the person being asked to loan the funds can truly afford to do so. People often are so focused on their financial situation they don’t stop to think about how lending money could affect the other person’s finances. This can do harm to a relationship, as the lender may feel obligated to provide the funds without regard to his or her own money difficulties.

No Repayment Plan

Personal loans between friends and family typically don’t come with a written contract. The borrower is simply expected to pay when he or she has the funds. However, this may lead to a dispute between the borrower and lender, as the lender expects the money to be repaid promptly. In contrast, the borrower may put other bills first, such as his or her mortgage, before repaying the loan. If borrowing from friends or family, it’s best to do a written contract as one would with a traditional lender to avoid this issue.

Additional Spending

If a person owes money to a friend or family member, the lender may find he or she questions each purchase the borrower makes. This can lead to hard feelings between the two parties, as what one thinks is a justifiable expense the other may believe is not. This brings to light any disagreements regarding personal finances and the relationship may not be able to survive any disputes in this area. The lender feels as if he or she is being dismissed, while the borrower ends up feeling guilty for spending on necessities.


Disclosing One’s Financial Situation

People often want to keep their financial information private. It’s hard to do so when one person is borrowing money from another, as this is a sign the person is having money problems. As a result, the debtor may become embarrassed and find he or she tries not to see those who know about the financial problems. It becomes easier to ignore the person than to share in the struggles he or she is experiencing and the relationship suffers as a result.

Avoidance

It’s hard to owe someone money and this can damage a relationship. The borrower may wish to avoid the lender until he or she has the funds to repay the loan and this can do harm, especially when the two parties spent a great deal of time together before the money was loaned. Keep the relationship intact by finding another way to obtain the funds needs to pay the debt. However, don’t hesitate to ask this friend or family member for ideas on how to secure the money. They will be glad to help.

Look at all borrowing options when funds run short. Individuals who do so may find they have alternatives to borrowing from family and friends. Relationships are saved when this is the case, and the money problems are resolved. Don’t overlook any option in this situation, as you want to find the best solution for all involved.

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