During a financial emergency, there are many options to choose from to meet your cash needs. Many people like to borrow a small amount from their siblings or parents to fulfill cash requirements. If they get comfortable with borrowing money from friends or family members, then they may get stuck in the habit of taking larger amounts. Of course, taking a loan from family or friends is a reliable option due to no interest rates, easy accessibility, urgency, or hard rules for repayment.
This option may seem alluring to everyone. People prefer taking money from loved ones than taking a Loan Against jewelry or property. But there are some good reasons why it is not always a good idea to borrow money from friends and family.
No clarity of terms and conditions
Borrowing money from family or friends seems very simple, but it can get complex due to the lack of clarity on some lending terms. As no legal documentation is required, you tend to go for repayment with more heartlessness, unlike a loan company. Due to no interest or late fee required, there is a chance of skipping repayments for more than a month. Additionally, if there are no cleared debts, your friend may not be comfortable and interested in lending money to them again. This little or no clarity may give birth to friction and an uneasy relationship between both parties.
They may or may not give you money
Whether or not your friend will give you a loan depends on your relationship with them. It is a natural influencing factor. Since they are well-known for your habits, expenses, and lifestyle, they might not be willing to give you money for any unnecessary expenses you need to bear, such as buying an iPhone or any undesired item. There is a better option to get a personal loan or Loan Against jewelry instead of getting a loan from your friends or family.
The legal structure is not secured
If you borrow money from any bank, both you and a lending bank function according to some set of rules and regulations where terms such as interest rate, loan amount, loan tenure, repayment method, late fees, processing fees, etc. are present; You both need to discuss and agree with these rules and terms. It leads to enhanced security for both parties. When it comes to taking a loan from friends or family, they might alter their minds about the agreed loan amount, repayment terms and conditions, etc., if they have their urges to meet.
A tension between the relationships
Of course, when you ask for money from your friends or family members, you may feel awkward and uncomfortable. It is all about approaching money, which can be approved or rejected by your friend or family. It may create a stressful situation between you and your friend/family. If they lend you money, they may feel appreciative of their money, their behavior with you and the way you spend it might turn aggressive if you are unable to repay it or pay it by delaying. This can affect your relationship with them and destroy your family relationships and ever-lasting friendships.
Personal financial matters tend to be private, and you want to keep them with you and your friend or someone who lends you the money. No matter how much you may trust a friend or family member, don’t trust them blindly to keep your loan information to themselves only.
Reputation is at a stake
If you have decided to borrow money from a friend or any other relative, there is a chance of spreading the words like wildfire. It states that you are not capable of affording a traditional loan and its related interests. It may worsen if you become a defaulter to repay the payment on time, then it may hinder your reputation in the family or social circle. Your friend or relative who has lent you the money talks about you aggressively.
So, make sure you weigh the consequences of getting money from friends and family before deciding to go with this option. It might not be a worthy idea to ruin your long-standing bond over several monetary problems.
Know the alternatives to meet your urgent expenses
If you need to pay your unpredictable expenses or in any emergency related to money, borrowing money from friends and family may be the first option to look for. But as far as its consequences are involved, it would be better to seek alternatives such as a Loan Against jewelry, instant personal loans, etc. Contact Diamond Banc, a reliable place to get loans on jewelry of any type if you don’t want to take a loan from your family/friends.