Is It a Good Idea to Borrow Money from a Friend?
By Space Coast Daily // February 18, 2021
You need to pay for a small, unexpected expense, but you don’t have enough to cover it. Your bank account is low, and your credit card balance is high.
You’ve decided that your best bet is to call up a friend and ask them for an IOU. But is that really a good idea?
The Problem with Asking a Friend for an IOU
The truth is that borrowing money from friends can come with serious consequences. A recent study found that two in five Americans would end their friendship over an unpaid loan of $500 or less. It doesn’t take a lot of money to destroy your relationship.
What Can You Do Instead?
Ask for a Gift:
If you’re not sure you can pay your friend back quickly, don’t ask for a loan. Giving them the impression that they will get their money back can put a strain on your friendship and damage their trust in you.
Ideally, financial experts recommend that people give their friends money as a gift instead of a loan because it doesn’t impose any expectations for repayments. It’s your money to spend as you wish. So, it will be smarter if you ask them for a helpful gift instead of an IOU.
It’s possible that your friends might not be able to do this, but if they can, you won’t have to worry about the stress and tension that comes with lending.
Apply for a Loan:
If none of your friends can offer you funds, you could apply for a line of credit loan online and use a withdrawal to help you cover the costs. See if you are qualified for these online loans in Florida and find out how you can apply.
There are two advantages with a line of credit loan. It allows you to deal with the emergency expense quickly and manage repayments later on. It’s also a great solution for this type of scenario because you can use it more than once. After replenishing the balance, you can utilize your available credit all over again — assuming your account is in good standing.
How to Repay a Friend
If your friend has already given you a small loan, and you’ve spent it, you need to try your best to repay them right away. The longer that you wait to repay that loan, the more upset they’re likely to feel about their decision to help you out.
To help you get those funds in a hurry, you should use one of the best budgeting apps to look over your expenses and set up a sensible budget. Try to adjust your variable expenses (groceries, entertainment, transportation, clothes) to save more money. Don’t use these savings for any other purpose. Getting this loan back should be your top priority.
If you don’t think it’s possible for you to pay your friend back at a reasonable time, don’t pretend that you can. Be honest and talk to them about this. You don’t want to give them any false expectations.
See if there’s another way that you can show your appreciation for their kindness. Here are some compromises that you can come to:
■ If you’re handy, you could do a home repair for them free of charge.
■ If you’re skilled in the kitchen, make them dinners or baked goods.
■ You could house-sit, pet-sit or babysit for them for free.
■ The important thing is that you put effort into returning them a favor in whatever capacity you can manage. When you can’t repay them financially, you find another way.
■ Of course, your friend is willing to lend you money. But will they be happy if you can’t pay them back right away? Find an alternative and keep your friendship in good standing.