Applying for a family loan is not risk free, but it can save you money quickly.
We all need money from time to time and it is not always easy to find it if you do not have a perfect credit. Sometimes, asking for a loan to your family or friends may be your only option.
Even with all the risks, this could also be your best option.
Asking for a loan from friends or family can save you alternative interest rates, loan sharks and a debt trap you can never escape.
Borrowing from the family has the advantage of having flexible payment terms, low or no interest rates, and possibly even deferring payments and paying later. However, there is also the shame and shame of asking for a loan and the risk of not being able to repay it.
Let's first look at five questions before asking for a loan. Then I will share four steps to ask the family for a loan that reassures everyone.
5 questions to ask before applying for a loan.
If you ask questions first, it will be easier to ask the loan to your friends and the process will start well.
1) Why do I need a loan?
Be honest with yourself, do you REALLY need money? Have you tried to reduce some expenses of your budget?
Whether you plan to apply for a family loan or go to a bank, this is the first question someone will ask you. Being in debt is not a joke. Less than a few hundred years ago, not being able to pay your debts meant forced labor in prison.
2) How much do I need?
The most important thing to remember about debt, beyond fees and payments, is to borrow only what you need. Borrowing more than you absolutely need is going to make a hole in your pocket. He will just spend money on something he does not need and the debt will continue.
Borrowing only what you need may mean asking for a loan to pay off all your other debts. This is called debt consolidation and can redirect your finances. It may seem strange to ask for a loan to settle other debts, but it can help you control your payments and save interest.
This is probably the most commonly lost part of getting a loan. Understanding the interest rates on different types of loans will put you under control.
This involves checking the rates of alternatives such as the accumulated value of the home, peer lending, personal loans and securities lending. Some rates can be so high that it's better to just bill your short term needs on a credit card, while other loans can be a lot cheaper.
It will also help you negotiate with the family when applying for a loan. The family may offer to lend you interest-free money, but you must also offer to pay something, especially for a large loan.
The loan amount you need is as important as you can afford it. It is not good to borrow to keep your head out of the water if you want to delay bankruptcy only a few months.
Always calculate monthly payments on a loan, using the interest rate and other terms of the loan.
Where will you find the money to make these payments?
Your credit score will be an important factor in all of this, but you probably already know it. This FICO score will determine where you can get a loan, which doors will be open and who you can ask for.
3) What are the loan rates?
This is probably the most commonly lost part of getting a loan. Understanding the interest rates on different types of loans will put you under control.
This involves checking the rates of alternatives such as the accumulated value of the home, peer lending, personal loans and securities lending. Some rates can be so high that it's better to just bill your short term needs on a credit card, while other loans can be a lot cheaper.
It will also help you negotiate with the family when applying for a loan. The family may offer to lend you interest-free money, but you must also offer to pay something, especially for a large loan.
4) How much loan can I pay?
The loan amount you need is as important as you can afford it. It is not good to borrow to keep your head out of the water if you want to delay bankruptcy only a few months.
Always calculate monthly payments on a loan, using the interest rate and other terms of the loan.
Where will you find the money to make these payments?
5) What credit score do I need for a loan?
Your credit score will be an important factor in all of this, but you probably already know it. This FICO score will determine where you can get a loan, which doors will be open and who you can ask for.
