Loan from family or friends? You can save, but also damage mutual relationships
For each of us there may be situations where we are facing a lack of finance. Especially when it comes to costly investments, such as buying or refurbishing a property or fitting out a new home, hardly anybody has sufficient account reserves. Likewise, unexpected events can get us to the point where a loan becomes the best solution. At this point, everyone should ask themselves a fundamental question – should I borrow from family or friends, or rather from a financial institution?
Money from family and friends? You may save on interest, but…
If you are lucky enough to have affluent family members or friends who are willing to help you financially, you seem to have won. On the one hand, it is quite likely that they will lend you money interest-free and, on the other hand, you can arrange individual and very loose rules, which is undoubtedly a great advantage.
Everything here works mainly on the principle of trust, which must work on both sides, otherwise good will and effort to save can turn to the opposite. In addition to the financial situation of all involved, you can also put your mutual relationships at risk. For example, imagine a situation where you borrow money from a friend with a verbal agreement that you will not start paying for half a year, but he will ask for it in two months because his car breaks down. Or if you set too high an installment that you will not be able to repay because you become ill in the long run.
In short, there should also be clear rules for family loans, and everything should be confirmed in writing. You should keep in mind that both sides are protected. It is no coincidence that many family conflicts have caused misunderstandings about lending money, and many friendships have failed because a friend lent money to a friend “for a good word”.
Fair companies will offer clear rules
If you do not have the opportunity to borrow from family members and acquaintances or do not want to commit to such an obligation due to the risks mentioned above, you can take advantage of the offers of financial institutions. You will probably pay something extra, but every fair company will offer clear rules in return. You will have an overview of the amount of the repayment, the repayment period and how to deal with situations that may arise during the repayment.
In addition, many companies are now accommodating their clients, even if they run into problems and cannot, for example, pay back temporarily. In any case, it is important not to play the “dead beetle” but to communicate and try to postpone the repayments or other solutions offered by the company.
Promotions, news and benefits also apply to loans
Be sure to look for a range of events, news and discounted loans, for example, for students or newlyweds. Shared loans are also becoming increasingly popular – with a partner to equip a household, but also with grandparents to renovate a house in which you all live.
“The trend of sharing loans with another person is growing year on year, and 56% of people are currently considering such a loan. This trend is mainly due to people around the age of thirty and older. Three quarters of them are in favor of sharing loans, ”says Kyle Manuer from Bankil.
Through such a loan you will spread the level of your responsibility, achieve a higher amount of the loan and, above all, more favorable loan conditions. In addition, sharing will reduce the risk of default.
Credit calculators as well as APR will help with the selection
When choosing the lender, instead of interest, be interested in the so-called APR, which in addition to interest includes other costs of credit. This will avoid unpleasant surprises, which can prepare additional fees associated with the loan. For larger providers, do not hesitate to use credit calculators on the web to calculate your interest rate, APR and repayment amount for any loan amount and maturity in advance. You can easily save up to several thousand crowns by a suitable choice of the loan amount and repayment period.
Last but not least, do not forget to read the credit terms thoroughly, think through everything properly and definitely do not be afraid to ask about facts that you do not understand. Everyone knows these instructions, but less is known that if you take the loan and then find out that the decision was hasty, you can withdraw from the contract free of charge within 14 days.