Family borrowing – is it worth it?

Some say that the family goes well only in the pictures. Regardless of whether we consider this sentence true or not, the family should support each other in every situation. We can always count on people with whom we are associated with blood ties. If we experience a hard breakup or the passing of a loved one, they will give us emotional support.

When we move or renovate the kitchen, they will physically support us. What if we need an injection of cash to start a new business or we expect the first child to arrive? Should we ask our loved ones to grant us a loan? And what if a member of our family asks us for such a favor?

For and against

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As with any serious life decision (and especially one involving large sums of money), the pros and cons should be carefully considered.

If we are looking for financial support and we ask a relative instead of a bank, several factors will work in our favor. First of all, we can probably count on a lower interest rate on such a loan, which in itself is a great plus. In addition, a family member may be less interested in our current financial situation and does not make his decision dependent only on the results and bank data. Instead, he will look at us with a human eye and decide for himself whether he wants to take the risk of lending us a loan. At the same time, the repayment date of such a loan may turn out to be less demanding and tight than if the loan was taken from a bank or other institution.

In turn, if we are a fortunate person to be able to afford to borrow a large sum of money to a relative, we should also consider positives.

The biggest of them is undoubtedly the opportunity to support a loved one

The biggest of them is undoubtedly the opportunity to support a loved one

Regardless of whether the loan will be used to develop a new company and make your dreams come true, or help you get out of the temporary hole in your life. As a borrower, we can show greater understanding and understanding than the bank, which will be beneficial for the borrower. At the same time, however, we can thanks to this loan get a higher rate of return than on the savings account, and thus place this money on favorable terms.

A loan from loved ones may prove to be a much better solution than a bank loan, but it also has its drawbacks. One of them is that banks always operate according to clearly defined rules that they must follow as an institution. The regulations are transparent and always available, so we have absolute certainty as to the framework and boundaries of conduct of both parties.

The bank will also not remind us of overdue payments to other family members on my aunt’s name day, which can be annoying and frustrating. Many friendships and marriages ended precisely because of money, which sometimes acts like an apple of contention. Both parties need to consider the risk of problems paying back the loan and what the consequences may be.

What to consider

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The family is the first choice when taking a loan for 63% of Poles. With so many loans, certainly some of them must end in torn nerves and loosening family ties. We probably have someone among our friends who got into problems with this title. So how do you make sure you don’t make the same mistakes?

First of all, in order to avoid ambiguities in the future, the loan terms should be agreed. Regardless of the trust and love we place in each other, writing a contract for this loan is a reasonable and mutually beneficial behavior.

Thanks to it, both sides know exactly where they stand and are able to defend their position if the need arises. The contract should of course be drawn up in two copies – one for each party. Usually, no notary or accountant interference is required for its creation, although seeking their opinion and support will not hurt either.

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