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Finance

How To Borrow Money From a Friend

Borrowing money from a friend or loved one can solve any sudden financial issue more quickly and efficiently than any bank loan, and although it’s definitely not a pleasant situation, we all have to face it sometimes.

Don’t worry, second guessing yourself and feeling unsure about this is completely normal – “What if there is a misunderstanding? Can a loan ruin a friendship?”  But to ensure everything will go as well as possible, here is a list of things to be wary of in our article on how to borrow money from a friend.

Be Straight Forward and Honest

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Staying professional, even if it’s a friend or a close family member is extremely important. Don’t try to make it look less important than it is, and whether it’s a small amount of money that you could pay back in a few days or a larger amount, make sure you let them know every little detail.

Make a Plan

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Make a plan and have a clear vision of why you need the budget and when will you be able to pay back the money. Although you are asking a friend, who is surely more understanding and less serious than a bank, it’s still an important issue and your friend needs to know every single aspect and detail to trust you with the money. Otherwise, not being specific enough can easily lead to misunderstandings.

Good Timing

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Instead of mentioning it at a random lunch or birthday party, invite them over for a coffee and make sure they have a spare hour or two. Try to find a time when they are not too stressed about other things and when they actually have time and patience to listen to you. Since you are asking for a huge favor, try to adapt to them and organize the meeting according to their schedule.

Discuss the Details

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We can’t stress this part enough: even though it’s a personal and sensitive topic, your friend needs to know every detail about the loan. Before you agree on anything, specify the following parts:

  • How much money you will need and how will you spend it?
  • When are you planning to give it back?
  • Will you pay an interest?

While discussing the details, try to adapt to your friend as much as possible while showing that you have a clear vision of the process. Don’t try to negotiate or refuse “no” for an answer and be understanding of your friend’s opinions and point of view.

Keep Them Updated

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Once you already have the money, don’t forget to constantly update them about the situation and process. Never make them feel the need to ask about the money, just be honest and straight forward, especially if you feel like you are going to be a bit late with the payment.

After paying back the money, be thankful and ensure your friend that you will find a way to return the favor. Knowing that you can rely on each other and trust each other is essential to keep the relationship strong and transparent.

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