Disclaimer: We do not encourage everyone to borrow money from their family and/or friends. This post is meant to help those who need financial assistance and want to borrow money the honest and proper way.
“Lending money to a friend or family member can ruin a relationship,” University of Florida telecommunications professor Andrew Selepak who specializes in social media. Asking to borrow money from family and friends can also be extremely difficult and awkward, but for Overseas Filipino Workers (OFWs) and their family, it is also more practical and relatively easier, especially because it does not require any sort of papers.
If your back is against the wall, and a loan is the most responsible way to get out of a problem or a bad financial situation, borrowing money might really be the best option. However, going along this route requires a certain amount of discipline. To make sure you do it right, here are some rules you can observe.
- Be transparent and humble.
Nobody likes opening up their wallet, so the best way to go about borrowing from a friend or a family member is to practice vulnerability. The borrower can take this time to humbly open about his bad financial situation, explain the need for the money, and show that the purpose for borrowing is legitimate.
- Whatever the outcome, don’t take it personally.
Every Yes-No question provides two possibilities of an answer. Even when taking out a personal loan from a friend or a family member, the same possibilities are in play. For the borrower, however, it is important not to take it personally if the request is not granted, even after the financial need has been explained. Avoid getting frustrated or annoyed when the request is not granted, as the person might still have his own financial obligations back home. This is particularly true when borrowing from a friend or family member who is an OFW.
- Treat the loan as a business transaction with the same respect and professionalism as you would a loan from a bank, a credit union, or a financial institution.
Lending money does not have to be a bad experience to the lender friend or family, according to McCuenications PR founder and executive consultant Bill McCue. He said, “The key to making this a drama-free experience for parties are setting agreed-upon deadline or deadlines, [and] if the person asks to pay back in installments, to repay the loan.”
- Set up a clear repayment plan and offer a written agreement.
Borrowers can show respect to the friend or family they are borrowing from by not saying “I’ll pay you when I can”. This particular expression somehow shows that repaying the loan is not a priority which is a big deal. Instead, break down the exact details about how the loaned amount will be returned. Include key details like the start date for the payments, the amount of installment, payment method, monthly due date, and the payment fulfillment date.
- Set up a backup plan in case you fall behind on payments.
There is a chance that you will miss the schedule on the repayment of your loan. Like everything else, it is best to have a backup plan in place. This plan can dictate what happens when payments are missed. The options can include offering to pay late fees that increase over time or offering a collateral. This will make them feel more confident while helping you out.
Following these rules may help, but regardless of how legitimate the concern is, borrowing once is enough. Learning your lessons should help you prepare for emergencies and keep you from borrowing money from your friends many times. Responsible borrowing means not always depending on your friends and families and not making the same mistake twice.