How To Borrow Money From Friends Or Family The Right Way

Nothing puts a strain on a relationship more than a loan, nor does anything compromise a loved one's confidence faster than overdue debt. Lending can ruin relationships, Bruce McClary, vice president of the National Foundation for Credit Counseling told NBC News BETTER, because people often lend money "in good faith" and fail to "set expectations." A 2019 Bankrate survey found that 60% of Americans had lent money to a friend or family member in the hopes that they will be reimbursed. Furthermore, 37% of the respondents stated that they'd lost money, while 21% claimed their personal relationships had soured.


For this reason, many of us balk at the idea of borrowing money from friends and family or asking them to co-sign a financial product for fear of being rejected or looked down upon. However, if you're in a tight spot, taking loans from your nearest and dearest might be the fastest and most convenient solution to get back on your feet. To enhance your chances of success and avoid awkwardness when borrowing from your loved ones, keep these pointers in mind.

Do your homework before you borrow money from friends or family

Before taking action, ask yourself whether borrowing from your loved ones is the best solution. To start with, you can consider seeking expert assistance to assess your personal financial plan and get your remaining funds in order. Out of consideration, do homework about your potential lender's financial situation, Andrew Selepak, a University of Florida telecommunications professor told U.S. News & World Report


Are they doing well financially? Are they having any plans in the pipeline that might eat into their savings? At the end of the day, you don't want to risk sacrificing your relationship for a short-term financial hardship. According to, you should also try to anticipate how your lender will react if they can't get their money back, such as whether they'll forgive the debt or take the matter to court.

Once you're sure your friend or relative can afford to give you a cheaper leg up, approach them with a well-thought-out plan.

Come up with a specific loan repayment plan

According to Forbes, you'd better have a clear repayment timeline when knocking on your lender's door, just like you always do when applying for a bank loan. Whether you're borrowing for investments or to pay off other debts, you should present your case in specific conditions and frame the conversations around facts rather than sentiments to avoid confusion, NerdWallet points out. Tell your lenders how you plan to use the borrowed money as well as how and when you can afford to pay it back. Remember to incorporate late repayment fees and the worst-case scenario in the plan. In discussing the available loan options, you will make your friend or family feel more at ease about lending you money.


Discussing borrowing and lending is often tricky and uncomfortable, especially when it involves the people you want to spend the rest of your life being on speaking terms with. As long as you approach the matter genuinely, justify your use of borrowed funds with confidence, and offer a detailed payback schedule so your lender knows what they're signing up for, you're off to a good start.