You are short of cash and are thinking of asking a friend for a loan. Usually, it's not a big deal to cover a dinner out or a movie here and there, but now that's a bigger amount of money. This is not a pleasant situation, in fact this article will guide you through various steps to find out how to borrow money from a friend without alienating their sympathies.
Steps
Step 1. Examine your finances
Before you take out a loan from someone, make sure you can't do anything to solve your financial problem on your own. Is there anything not very special to you that you could sell? Is there anything expensive that you could do without for a while?
Step 2. Determine the amount you need
Don't assume it. Use all the information you need to figure out exactly how much you need. If you ask too much, chances are your friend can't afford it. If you ask too little, you risk going to him again for another loan.
Step 3. Explain the situation to your friend
Be honest. Let him know why you need the money and how much you need. The ideal is to reassure him that it is a one-time loan and that you will not come back to ask him for more money after six months. If you find yourself in an unexpected situation that you have no control over - for example, you've suddenly lost your job or a health emergency has occurred - it should be easy. If, on the other hand, you've bought so many useless things that you couldn't really afford, you'll need to show him that you realized you made a mistake and learned your lesson.
Step 4. Discuss the terms of the loan
You should already know how long it will take you to pay your friend back. Make the agreements clear and simple. You should be able to pay off the loan within the agreed terms without neglecting other financial obligations, so that you get your money back in a timely manner.
- Prepare a schedule in case you fail to make a payment. Even if you both don't want that to happen, it's much easier to discuss it in advance than to face this situation caught off guard. You may decide to extend the payment period once, pay double the next installment, pay for non-payment beyond the deadline, or whatever else you both feel is right.
- Consider signing a contract. Your friend may say it's not necessary, but it helps to show him that you are serious about paying off the debt.
Step 5. Make the loan balance a priority
After considering your needs - rent / mortgage, utility bills, food, etc. - immediately put aside the money you owe your friend.
Step 6. If you miss an installment, address the issue right away
- If you have already agreed on what to do in case of a missed installment, stick to what you have decided together.
- If you don't discuss overdue payments at the time of the loan, talk to your friend right away. It is not pleasant, but you will owe him an explanation. Tell him what happened and how you intend to recover.
Step 7. Thank your friend for helping you out
Do this when he agrees to give you the loan and when you are done paying for it. Remember that he is doing you a favor, so show him how much you appreciate his gesture.
Advice
- Be prepared in case she says no. Your friend may not be able to lend you what you need or is worried that a loan might jeopardize your friendship. Whatever the reason, he has the right to refuse. Try to prepare a second plan to get the money you need.
- If you know you're not good at saving money, you could try to keep the amount you owe him in cash and put it in a sealed envelope with his name written on it. If you are tempted to spend that money by opening the sealed envelope, you will have time to think about what you are doing.
- If you find that you are unable to pay it monthly, see if it can change the terms of the loan. Maybe you can give him the money in small amounts over a longer period of time. It's best to determine the best amount and time frame the first time, so you can make sure you know how much you can afford. If you ask him to change the debt, you should be even more certain of how much you can give him back and in how long. It is not appropriate to ask him for another variation a few months later.
Warnings
- Don't avoid your friend if you can't pay him a payment. While it is not pleasant to explain that you cannot pay at the agreed time, avoiding the problem, you only risk making the situation worse as you put him in the awkward position of having to track you down and remember that you owe him money. If you don't give any explanation, he can assume you're just trying to get away with not paying what he's due. Poor communication can ruin your friendship, so talk to him even if it's difficult.
- Keep your expenses under control. Unless for other reasons, your friend has lent you money so that you can deal with certain difficulties, not to get you to buy what you want. If you go to the movies or out to dinner every now and then and always pay your installments on time, you will surely have nothing to complain about. But if you shop expensive or go out to eat all the time and you are already at a loss for some payment, it is easy for him to feel used and next time he will think twice before lending you more money.
- Do not lie. Be as honest as you can about why you need a loan or why you can't pay it. If he finds out that you lied, it is very likely that your friendship will end.
