How to Borrow Money From Family

Family should be a safe place for all conversations, a place where they still love you when you disagree about politics and child rearing. Throw a question about borrowing money and the talkative get quiet. Suddenly, the kids all have parties that they need to get to. It doesn't have to be that way if you do a little thinking and priming beforehand. Read on to learn more.

Instructions

1. Ask for the loan only if it is a necessity and not for a material object or trip you wish you could have. To strain a family relationship over money should be one of the last options you can think of, not at the top of your "want" list.

2. Choose the family lender carefully. Those who have had unplanned large expenses like major car and home repairs know what it is like to be caught short, so make easier sounding boards or targets, whichever you prefer to call them.

3. Treat the loan like any other business deal and not lending little Billy a quarter for ice cream. All questions answers from both sides should be answered so that the lender and borrow feel comfortable.

4. Spell out the loan terms on paper exactly how both parties want it. Include interest rate if any, monthly payments, penalties and verbal boundaries. Since it is family that you are borrowing money from, you should add any comments on confidentiality, so the entire family all over the country doesn't know about the loan.

5. Specify a piece of collateral as a show of good faith and in case you should go bankrupt, your family member will be on the list of creditors to be paid. This will add to their piece of mind when shelling out their hard earned cash.

6. Research tax issues for both parties, lender and borrower if the loan is going to attract IRS attention or interest is being charged and would like to be deducted by the borrower.

7. Pay the family member debt before schedule if you are able to. The credit card company will not call asking how you paid for that spontaneous weekend trip while you still owe mom and dad.