There will be occasions when we might have to borrow money from others. I have had personal experiences in both lending money as well as borrowing money. I usually refrain from both activities after having a few bitter experiences. It requires an immense amount of discipline to manage the financial situation when we are both lending as well as borrowing money. I would personally recommend against borrowing money from family members. For a person who is borrowing, it gives a lethargic feeling and for those who are lending, it gives a tough time if the borrower is not returning the money on time.
Moreover understanding between friends would be a lot better compared to family members. Friends usually understand the situation and can be a little lenient but family members may take it wrong and if things are not working out well, they might end up losing their patience. In general, staying away from borrowing money is always good. Even if we try to borrow money, we have to make sure that we have the capability to repay it back.
Is it profitable for both you and your friend?
When you borrow money from a friend, you shouldn't be thinking about your own situation alone. We have to also think if the financial situation of our friend is also not affected because of this activity. It is better to define a proper interest for the money borrowed so that both parties are benefited from it. Some friends and family members might say that they don't need anything extra for what they are giving. But it is definitely advisable to work out profits for both parties and make sure the lender also profited from this transaction.
Important to have an agreement
Even though friendship sometimes doesn't need any agreement, it is good to have something written so that it is good for both parties. For anything to do with money, it is always good to have an agreement written and both parties signed. It is not only for the safety of the individuals but also for the sake of having a proper relationship between both parties even if things go wrong. We don't have to do agreements for smaller amounts. It is better to choose to do agreements if the amount is big and if there are other tricky things involved.
Better to repay it faster
Any loan that is borrowed should be repaid faster. We cannot take advantage just because we borrowed the money from our friend. Yes, it is true that some friends might give us the privilege but we shouldn't take advantage of the privilege given to us. The first priority should always be to complete the loan faster. It also gives us peace of mind and if one liability is done, we can peacefully work on other investment plans.
Never assume your friend wouldn't care if you don't return
I have to tell you this thing specifically. Some people have bad financial discipline. They don't care about paying back if the amount was borrowed from a friend. Some lenders might be keen on getting the money back but some lenders would take advantage of the friendship and not return the money. After a decent amount of time, both the lender and borrower might forget the deal. Usually, lenders will still remember and they might have that in mind throughout the friendship. Later if the borrower is in a good financial position, they might think about this. So it is always better to stay awake until the money is repaid and never miss even a single installment. Mostly do it on time or before it is due.
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