If you have borrowed money from family members for a rent deposit, college books, or anything else, you are not alone. Borrowing from a family member can be a good option, but be considerate. Relationships can suffer if repayment isn't made on time, so treat your in-the-family loans seriously!
If you decide to pursue an in-the-family loan, consider writing a contract, nothing complicated, but something that lays out how much is to be borrowed, and how/when it will be paid back.
Some in-the-family loan advantages include the following:
- Family loans usually require less security or none at all.
- Interest is often lower or non-existent.
- Contract terms are more flexible.
- As a general rule, there are no tax implications for in-the-family loans under $10,000.
If your family members are unwilling to loan money, then there is no reason to read further, but if they are, you may remain uncomfortable with the idea of borrowing from those you have been making a great effort to rely less upon financially. Read some tips at Borrow from family without guilt or grief if you have concerns. If you want to buy a Nintendo Wii or put a custom stereo in your car, borrowing money from family is probably not going to fly, but if you need money to pay for a community college class or any investment to improve your economic future, a conversation may be worth having.
Feel free to share your in-the-family loan experiences.
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