Money crunch - ask a family member for a loan.
There are three key questions if you are considering borrowing from parents, grandparents or siblings :
* Why do you need the money?
* How do you expect to pay this back?
* What are you doing so this doesn't happen again?
If you can't answer these questions honestly, you are not ready to ask for a loan.
If you can answer these questions, you need to know how to minimize the potential for resentment and destructive situations. These tips will help.
Know from whom you borrow
Ask yourself, "If I lose the money, what will be the outcome?" Relatives for whom money is an obvious emotional issue or those who really can't afford to lose anything are not good lending candidates.
Put everything in writing
It may be sufficient in a very simple transaction to write a letter that specifies the terms of the agreement. That protects both sides.
While a short-term loan of a couple hundred dollars might be arranged with a hug or a handshake, larger loans should have a more formal structure, say financial experts. You should use a company such as One2One Lending to help guide you through the process. They can be found at [http://www.one2onelending.com].
When you record the loan, make sure to include:
* The names of the lender and borrower
* The date of the loan initiation
* The amount
* The date by which the loan is to be repaid
* The interest rate, if one is applied
* The number of payments
* How often payments are to be made (weekly, biweekly, monthly), and
* The minimum amount to be paid.
The idea is not to try to create a legally binding document. You are simply putting the arrangement on a formal footing. This very basic process can make both parties more comfortable with the whole arrangement. It is a sign of respect, and it impresses upon the borrower that this is not a gift, not something that can be ignored or shrugged off later, and that repayment is definitely expected.
Give lenders collateral for the loan
Specific collateral for lenders will ease concerns and ensure that they don't lose everything if things don't go well. In addition, if you are borrowing a large sum, the terms should include a fair interest rate. If your dad has to pull the money from savings, he's losing that interest for the duration of the loan. You should also make sure there is an ongoing paper trail, including a loan agreement, proof of repayment and plenty of receipts.
Accept a "no" for answer.
Also, be prepared for a "no." Your relative or friend may not be in a position to loan you cash -- or just may not want to. You need to be prepared to handle a negative answer with grace and understanding.
* Why do you need the money?
* How do you expect to pay this back?
* What are you doing so this doesn't happen again?
If you can't answer these questions honestly, you are not ready to ask for a loan.
If you can answer these questions, you need to know how to minimize the potential for resentment and destructive situations. These tips will help.
Know from whom you borrow
Ask yourself, "If I lose the money, what will be the outcome?" Relatives for whom money is an obvious emotional issue or those who really can't afford to lose anything are not good lending candidates.
Put everything in writing
It may be sufficient in a very simple transaction to write a letter that specifies the terms of the agreement. That protects both sides.
While a short-term loan of a couple hundred dollars might be arranged with a hug or a handshake, larger loans should have a more formal structure, say financial experts. You should use a company such as One2One Lending to help guide you through the process. They can be found at [http://www.one2onelending.com].
When you record the loan, make sure to include:
* The names of the lender and borrower
* The date of the loan initiation
* The amount
* The date by which the loan is to be repaid
* The interest rate, if one is applied
* The number of payments
* How often payments are to be made (weekly, biweekly, monthly), and
* The minimum amount to be paid.
The idea is not to try to create a legally binding document. You are simply putting the arrangement on a formal footing. This very basic process can make both parties more comfortable with the whole arrangement. It is a sign of respect, and it impresses upon the borrower that this is not a gift, not something that can be ignored or shrugged off later, and that repayment is definitely expected.
Give lenders collateral for the loan
Specific collateral for lenders will ease concerns and ensure that they don't lose everything if things don't go well. In addition, if you are borrowing a large sum, the terms should include a fair interest rate. If your dad has to pull the money from savings, he's losing that interest for the duration of the loan. You should also make sure there is an ongoing paper trail, including a loan agreement, proof of repayment and plenty of receipts.
Accept a "no" for answer.
Also, be prepared for a "no." Your relative or friend may not be in a position to loan you cash -- or just may not want to. You need to be prepared to handle a negative answer with grace and understanding.
