Steps to take before borrowing from family/friends
If you need to get your hands on some cash, then one option that may be open to you is to ask a family member or a friend to help you out. However, before you do this, there are some important things to consider.
Do you have any savings? If you have some money of your own put aside, then this could remove the need to have an awkward conversation with your friend or relative about borrowing from them. At the very least, if you have some form of savings, but not enough, then you may not need to ask them to lend you quite as much.
Do you want them to know? Once you approach a family member or friend for money, they will most certainly know that you are in financial difficulty, and you may have preferred them not to know about your situation. If you struggle to pay the loan back, they will know that your difficulties are ongoing. They may well also ask you why you need the money, and again you may be reluctant to tell them this.
Think carefully about whether you are borrowing for the right reasons. Regardless of who is lending you the money, it is never a good idea to borrow in order to meet everyday expenditure, or to pay for luxuries, or to pay off other debts.
Think carefully about who to ask. Ideally you should ask someone who you think may be comfortable lending you the money, but anyone could be forgiven for feeing awkward when asked to lend to someone close to them. You may also want to approach someone who you think may be more understanding when it comes to paying back the money. If you choose someone who isn’t understanding, it could ruin your friendship/relationship with that person indefinitely.
Ensure you expect to be able to pay it back. When accepting a loan from a relative or friend, you will not be subject to the rigorous credit and affordability checks that a lending company would carry out. However, as with any loan, think about whether you expect to be able to make the required repayments.
Get it in writing. Although you may be borrowing from a close relative or close friend, money can still be the cause of arguments. Draw up a simple agreement which sets out how much is to be repaid, by when, and how much the individual repayments will be.
Wonga South Africa has published information on its website regarding the other side of the coin – the things someone should consider before agreeing to lend to a friend or relative.