When you’re short of funds and need a little extra cash to sail over until the next month, taking a loan from the bank can seem a little scary. You might feel that it’s more reasonable to ask your family members or friends to help you out, and you can return the amount next time you get your salary.
While this sounds like an easy plan to get quick funds, it is not as simple as it looks. Borrowing money from your family members can induce all sorts of issues, both in your relationships and finances. So as tempting as it might look, here are some reasons why you shouldn’t borrow money from your family members.
It is an open-ended financial loan.
When you borrow money from your family members, you will never sit down with them and discuss the loan terms. Also, most of the time, the borrower feels that this is an interest-free loan and holds no pay date.
Due to the informality of the loan, both the lender and borrower remain stressed. While your family members will remain worried about the arrears, you might be worried about when your family or friends might call you to return the money. So these open-ended loans can pose a significant threat to your relationship and also your mental peace.
It puts a strain on your relationships.
While you might think it is okay to borrow funds from your family members when in dire need, it can sometimes put a strain on your relationships. Even though your family members won’t say so, they might sometimes feel that you will not repay the loan sum easily.
If you want to avoid this from happening, it is better to avoid these personal loans or set out clear repayment terms. You can mutually decide the interest rates, repayment tenured, and other obligations to keep the communication lines open and save your relationships from getting hampered.
Your reputation remains at stake.
When you borrow money from your family members, your reputation remains at stake. In addition, a resentful family member might sometimes tell your other relatives or friends about your incapacity to repay the loan. This way, your reputation gets soiled, and your friends or family members might never count on you for giving out any financial help.
Hardship for the lender.
A family member from whom you requested the funds may feel obligated to help you even if they do not own sufficient funds to do it. It will not only build hardship for the loan lender, but it also can induce hatred between the borrower and lender. In addition, even though your family member consented to give you the loan, they might later blame you for their own decision and would demand the money back, causing you extreme financial troubles.
The Bottom Line
In a nutshell, borrowing funds from family members or friends aren’t usually a reasonable idea. If you think it is the only resort left, it might sometimes work, but only if you look at it like any other loan from a professional institute and lay down specific rules from timely repayment.
Financial hardship is never easy, but with the right knowledge and resources, you can find your way out of it. To learn more, get in touch with Briteside Solutions today.