Friends are always supposed to have your back. It’s only natural that you would turn to them for help when you’re having some financial trouble. But, asking your friends to lend you money isn’t always a good idea. Read ahead to find out why.
Why Borrowing Money from Friends Is Risky
Your friend will likely jump at the chance to help you out. They care about you, and they don’t want to see you struggle. The problem with borrowing from friends happens after you get the money, and you need to pay them back. The longer that you take to give them back their hard-earned cash, the more that you risk damaging your relationship for good.
This is not a small risk. A survey from the Bank of America found that two in five Americans would be willing to end a friendship over a loan that wasn’t properly repaid. And the majority of those respondents said they would make that difficult decision over $500 or less. How can you be sure that your friend doesn’t feel the same?
Even if your friend isn’t willing to cut you off completely because of a bad lending decision, that doesn’t mean that your relationship won’t change. They could resent you for spending money on non-essentials instead of paying them back. They could feel like you’ve taken advantage of their kindness. They could lose their trust in you.
You have to ask yourself if you’re willing to risk your friendship over a little bit of money.
What Can You Do Instead?
There are plenty of alternatives to asking a friend for money. You can apply for a line of credit online. A line of credit is usually easier to handle than a high-interest loan because rates are based on what you borrow, not on the credit limit. Click here to get the info you need about lines of credit so that you can understand everything about this borrowing method.
Another alternative to borrowing from a friend is to increase your income. This is more of a long-term solution than a short-term one. You could ask your boss for a raise, look for a second job with part-time hours or start a side hustle to bring a lot more money into your savings account.
What If You Do Borrow from a Friend?
So, you’ve decided to take a chance and ask your friend for a loan. If you do that, you’re going to have to do these things to make sure that the repayment goes smoothly:
- Set up a personal budget right away to see how much you can put away each week to repay them.
- Be open about your budget and repayment plan. Don’t leave them guessing.
- If the repayment will take a long time, prove to them that you appreciate their friendship through small acts of kindness. You don’t want them to feel like you’re taking advantage of them.
- Most importantly, admit when you can’t pay them back. Honesty is the best policy. You would rather them be upset about the money than about your lying.
Your friendships are worth more than a few hundred dollars. So, don’t let a small loan damage your bond forever.