As it is important for family members to stick together, some things are better left untouched. For instance, borrowing money from family members. There is too much that could go wrong such as your inability to pay the loan back. This creates a spiraling effect of arguments, embarrassments, and mistrust between family members. Here are five reasons why you should not borrow from your family.
1. Expectations Are Never Set
Those borrowing money from family members never want to set expectations, and their family members feel awkward asking for terms. They are open-ended loans. An agreed upon repayment date is never set, and they do not include interest either. It’s easy to say, “I didn’t know you needed it back right away” if you two never discussed terms. This can lead to a stressful situation on both parties’ behalf. Or you can just learn to say “no” which is often the better thing to do.
2. Paying Them Back is Never a Priority
Once you’ve borrowed from a family member, you don’t have that sense of urgency to pay them back. In the back of your mind, you feel they always know where you are; it’s not like you’re going to skip out on them. Unlike your electric, gas, and auto payments, you don’t have a set date to pay them back. So they are not prioritized on your list. Also, unlike a credit card statement or a loan statement, you don’t get this reminder in the mail. You have no consequences:
- No increased interest rates
- No late payment fees
- No reports to the credit bureaus
- No impact to your credit score
- What’s to make you stand up and take accountability for this loan in the near future?
3. You’ll Feel Weird at Family Gatherings
Being your family member, you’re sure to run into them for holiday gatherings and family reunions. You’ll feel uncomfortable being around that person, laughing and talking as you normally would. Think of how awkward it would be, knowing there are others in your family who know you were in a financial strain and reached out to your family member for money.
As family members should be there for each other in their time of need, it’s not necessarily financially that they should be there for each other. So any conversations about their latest investments or the new car or home they bought quickly make everyone think of this loan.
4. You’ll Always Feel Indebted to Do as They Ask
There is an old saying that the “borrower becomes a servant to the lender.” If you are unsure of what that means, it states that you will always feel indebted to your lender. Every time they ask for a favor you feel inclined to do so, even if it inconveniences you. They could also feel that you should take their financial advice on how to run your household. Nobody wants to deal with that. Then, you’re stuck trying to figure out a way to pay that loan back, faster than you thought.
5. You’ll Feel Guilty if They Need the Money Sooner than Later
As you ran into an unfortunate incident, the family member you borrowed money from may also. They could experience car trouble, a job loss, or have a few new prescriptions they need to fill. How would you feel knowing that the money you’ve borrowed can make a difference? They may even approach you for the remainder of the payment, but you didn’t have it to give at that time. The guilt could set in, and relationships are destroyed.
If you find yourself needing a loan, it’s best to stick with a company that specializes in loans. Even if you have bad credit, there are plenty of alternate sources to find bad credit loans from. Borrowing money from family and friends can ruin friendships and divide families. In the long run, it’s not worth it and will just cause stress on all parties involved.