How to Borrow Money

Step-by-Step Guide

1. 1

   Step 1: Make a list of friends and family members who you think could lend you money.

   Think of all of the close friends and family members you have who you believe have the means to let you borrow the money you need.
   
   Think of your relationship with this person.
   
   Are you very close with each other? Have you lent them money in the past? They are more likely to lend you money if they have a close, trusting relationship with you and if you have also helped them out financially in the past.
   
   Choose the person you think is most likely to be willing to help you out, and contact them first.
   
   In general, it is not usually good to mix money matters with family and friends.
   
   If you don’t pay them back you risk ruining your relationship with them forever.
2. 2

   Step 2: Be straightforward.

   When you meet to ask for the money, be friendly, but don’t beat around the bush.
   
   It’s a good idea to make small talk before bringing up the issue in order to avoid seeming uncaring.
   
   For example, don’t just walk in and say, “Hey, I need some money.
   
   Can you lend it to me?” Instead, ask them how they’re doing, and see what is going on in their lives before getting into the money.When you do bring up the issue be direct, but also polite.
   
   For example, you can say, “I’m really sorry to have to ask you this, but I’ve come across some unexpected financial difficulties.
   
   I’m a bit short on rent money this month.
   
   Would you be able to help me out?” Don’t beat around the bush by telling them that you’re having problems, and hoping for someone to help you out.
   
   They may not pick up on the hint, which puts you in an awkward situation.
   
   Reassure them that you understand if they can’t lend you the money.
   
   Though you may really need the money, it isn’t fair to pressure someone you care about into lending you money they may not even have. , As someone lending you their own money, they have the right to know what you need it for so don’t lie about it, even if you want the money for something that you don’t really need to have.For example, if you want the money for concert tickets say, “The thing is, my favorite band is coming to town and I’m not sure if I’ll get another chance to see them.
   
   The tickets go on sale in a week, but I don’t get paid for two weeks.
   
   I’m worried they will sell out before I get paid.
   
   Could I borrow the money from you to pay for them up front and then pay you back in two weeks when I get my pay check?” They may have ideas or other suggestions about how you can come up with the money without borrowing it, and you should think about whether these are realistic options for you as it is best to avoid borrowing money when you can. , One great way to make your friend or family member feel more secure in lending you money is to offer to pay interest on the loan.
   
   It’s good to suggest a rate between 3% and 5% of the total loan, which will help them out because it means they will be earning more interest on the money than they would if it was sitting in a savings account.
   
   It will also help you out because it is a rate lower than what you would be paying if you borrowed money using any other method.In general, it is best to insist that you pay some interest on the loan even if your friend or family member says that there is no need to. , Another way to help show them that you’re serious about paying them back is to offer up something of value as collateral.
   
   This means that, if you don’t pay them back in the agreed upon time span, whatever you have offered up becomes the property of the lender.A good example of collateral is your house.
   
   If you have a mortgage on your house, the bank has the right to take your home away from you if you fail to make your mortgage payment.
   
   In this case, your home is the collateral.
   
   In a situation where money is being exchanged between friends what you put up as collateral can be something the two of you have agreed upon.
   
   For example, maybe you have an antique that your friend really admires and would love to have for themselves.
   
   In this case, you can place the antique item up as collateral.
   
   If you fail to repay them in full and on time, the item becomes theirs to keep. , Realize that this person may say, “No.” If they do say no, then accept their answer with grace and remember that they are probably not refusing because of you personally.
   
   Many people make it a rule never to lend money to friends or family members in order to avoid ruining the relationship.
   
   If they agree to lend you the money, great! However, it is important to follow a few steps before getting the cash from them in order to avoid any potential problems later on.Remember that they might refuse simply because they don’t have the money to lend.
   
   Even if you do think they are refusing because they don’t trust you, avoid being rude.
   
   Being friends with someone or being related to someone does not come with an obligation of money lending. , It may seem stupid, but it is important to put the details of your loan in writing in order to avoid any potential misunderstandings.
   
   If your friend or family member is a bit forgetful, having it all down in writing may also prevent the person lending you the money from saying that they lent you more than they actually did.Be sure to include the name of the lender and the borrower, the amount borrowed, when the money should be paid back by, and how much interest should be paid in addition to the original loan.
   
   If you put up any collateral be sure to include what it is and under what terms it will be returned.
   
   Make sure that both the lender and the borrower sign the document.
   
   You may even consider having the document notarized.
   
   Having a document notarized means that a qualified person has witnessed the signing of the document, and that the people signing the document are who they say they are. , Once you have the money, write them a short note thanking them for helping you with your situation.
   
   You don’t have to go into details, but remind them that you will be paying them back as soon as possible, or at least by the agreed upon date.
   
   You may even consider having them over for dinner to show them that you really appreciate them helping you out. , When borrowing money from friends or family it is extremely important to pay the money back on time and in full.
   
   If you don’t, you risk losing their trust and perhaps the relationship all together.
   
   If, for some reason, you are having trouble paying them back, get in touch with them right away.
   
   Don’t let the date that you promised to pay come and go without letting them know what is going on.
   
   If you are honest and straightforward about why you’re having trouble, they will be less likely to think that you are just trying to get out of paying them.That said, you should still work hard to get the money back to them as soon as possible, even if it is just little by little.
   
   Say you borrowed $500 and promised to pay the full amount the following month but couldn’t because your child broke his arm, and you had to use that money to pay the deductible at the hospital.
   
   Call your friend or family member and tell them what happened.
   
   Then pay them back as much as you can, and tell them when you’ll be able to get the rest.
   
   If you come into some extra cash, then there is no reason why you can’t pay them back ahead of time.
3. 3

   Step 3: Be honest about why you need the money.

4. 4

   Step 4: Offer to pay interest.

5. 5

   Step 5: Consider offering up something of value as collateral.

6. 6

   Step 6: Accept their answer.

7. 7

   Step 7: Create an agreement stating the terms of your loan.

8. 8

   Step 8: Write them a thank you note.

9. 9

   Step 9: Pay back the loan on time and according to the schedule.

Detailed Guide

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