One of the cheapest and probably easiest ways to raise quick funds is to borrow money from family or friends. If you know someone with spare cash you can loan, why even look elsewhere, right?
Though convenient and cheap, taking out a loan this way may entail not only financial consequences but also emotional stress. Since there’s rarely any written agreement involved in this type of borrowing, borrowers tend to break their word when it comes time for collecting payments. This is why borrowing money from family or friends can be a bad idea in the first place.
Unlike with personal loans from banks and high street lenders taking out a loan from someone you know is less formal. All you have to do in most cases is ask and the person hands over the money immediately. Both parties usually agree upon the date of payment. It could be after a week, a month or even longer. The best part for the borrower’s end is the fact that there’s really no or very little interest rates involved. The downside, the amount of money you can borrow may be limited.
With the low to no interest rates, it’s no wonder why a lot of people are borrowing money from family or friends. But there’s just one danger you need to be really careful with. And that’s the tendency to be lax with your payments. Some even go as far as default on the loan without notice to the lender.
When you fail to repay the loan on the agreed date, it’s not only the financial aspect that’s affected but also the relationship. If this is something you want to completely avoid, it may be best to borrow money elsewhere. Remember that at the end of the day, your relationships with people is more important that money.