Found Yourself In A Borrowing Situation? Here’s What To Do

February 12, 2020

Sometimes we need a little help and that’s okay. If you’re finding yourself in a situation where you need to borrow money for one reason or another, you may be feeling some stress.

If you find yourself in a borrowing situation, here’s what you can do.

Do You Really Need To Borrow? 

If you find yourself in a situation where you feel like you need to borrow finances, the first thing you’ll want to do is ask yourself, do you really need to borrow this money? Consider what the financial situation is and if you need to borrow money in order to accommodate the financial situation. If you need quick cash for a vehicle for work, this is understandable. However, you won’t want to borrow an unnecessary volume just to obtain a vehicle. Set a realistic threshold for the money that you know you’ll require.

Borrowing From A Traditional Source 

When most people require money they’ll generally borrow from a bank or another lending service. If your credit is in good condition and you’re gainfully employed this generally isn’t a problem for the larger populace. Depending on the loan you’re looking to acquire this can change the interest rate on the borrowed money. If you don’t have a good credit score, you may want to re-evaluate whether or not you need a loan currently. You can always look into borrowing money from a family member if not. If you don’t have a steady source of income, you should definitely consider how you will be paying a loan back. People may not be willing to lend money if you’re unable to generate an income.

How To Ask Your Family For A Loan? 

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When you’re asking family members for a loan, it’s important that you’re honest with the reasons that you need the money. It may be uncomfortable, but you should be as transparent with your current financial situation as you can be. The experts who wrote this blog post, suggest using a polite demeanor. The more honest you are with your family members the more likely they’ll feel comfortable lending money. Don’t ask for money that you know you aren’t going to need, this may complicate the relationship and your ability to pay back the loan.

Explain how you’ll pay back the borrowed money to them and come up with a plan. If you’re unable to make a payment, come up with a plan on how you’ll be able to pay back your family member anyway. Explain what your employment situation is and how much money you’re making.

Stipulations on Loans From Family Members

Just like any other lending service you’ll want to establish a way to pay your family back for the money that you’ve borrowed. This may come with monthly payments as if you were paying back money to a bank. It’s best for your family members if you pay them in a way that’s easily traced and helps them keep track of the remaining balance. Your family member may decide to charge interest on the loan and this is up to their discretion. Depending on your relationship with the family member they may either charge you more or less than a traditional source would. It’s important that you come up with a “payoff” date with the family member as well as how much you’ll end up owing with interest. 

Maintaining A Relationship With Family 

A lot of families aren’t eager to loan money to other members of the family because they’re worried about impacting familial relations negatively. If you’re unable to make payments and you’re dodging your family member this isn’t going to contribute to a healthy relationship. Make sure you’re honest with them if you’re experiencing a tough financial experience and tell them how you’re going to handle it. The worst thing that you want to end up happening is having a relationship is disrepair because you borrowed money. This is going to reduce the likelihood of them assisting you in the future, and can even break down social interaction.

Borrowing money can always seem like a stressful process. You need to apply to banks, loan services, or potentially enlist the help of either friends or family. If you’re borrowing from your family or friends make sure you’re maintaining a transparent relationship of honesty. If they are willing to help you during your time of need, you should especially respect and adhere to the payments you’ve agreed upon. You want to maintain a relationship with your family, and explaining how your financial situation is going is a great way to do that. Finding yourself in a borrowing situation can be stressful, but at least you know how to handle it.

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