When you’re in a tight spot financially, you might be tempted to borrow money from those closest to you. Especially when you don’t need a high amount, borrowing from friends and family could seem like the right thing to do. But in most cases, this does not turn out well. Instead, it is much wiser to opt for a small personal loan to fund your needs. Here are the top reasons why such a loan is a better option than borrowing from your family and friends.
1. Affordable interest rates
When you borrow from a family member or friend, they may or may not choose to charge you an interest. However, lenders today offer extremely affordable small personal loan interest rates. This makes it easy for you to repay the amount without running the risk of straining a personal relationship.
2. Fixed terms of repayment
When you take a personal loan from a reliable lender, all terms and conditions of the loan are precisely written down in the loan agreement. This makes the borrowing process smooth. But, borrowing from friends and family usually happens over a cup of tea and shaking of hands. With no solid loan agreement in place, arguments or disputes may arise in the future.
Additional Read – Top Reasons Why a Personal Loan is Better than Peer to Peer Lending?
3. No risk of awkwardness
When you take a small loan from a lender, you will be able to visit the lending institution a few days after taking the loan without feeling awkward. This, however, may not hold true with friends and family. Every time you meet the person(s) you’ve borrowed from, you are likely to feel a gnawing sense of indebtedness. This may create a sense of awkwardness for both the parties.
4. Fixed tenure
It could be possible that the family member or friend you borrowed from faces an unexpected financial crisis. Then, they may ask you for the required sum of money or, worse, to repay the small personal loan earlier than the agreed tenure. If you’re unable to help them during their time of financial trouble, a feeling of guilt may descent upon you. In the worst-case scenario, your relationship with that person might be adversely affected.
5. No risk of a strained relationship
“Till debt do us part” – there’s a reason they say that borrowing money from family and friends can potentially ruin the relationship. This is especially true if you’re unable to repay the loan on time. Since many emotions are at play when you borrow money from a relative, simply a careless mention of this topic in a family gathering could strain your relationship. Needless to say, this is a risk you never run with a lending institution.
It’s always a smarter move to take a loan from a reliable lender than from family or friends. If you’re looking for one, look no further than Tata Capital. Get an amount ranging between Rs. 40,000 to Rs 1.5 lakhs with minimal paperwork and quick approval.
Use our simple personal loan EMI calculator to know your EMIs in advance.