Your family will always have your back. They’ll be there to comfort you when something goes wrong, and they’ll be cheering you on when things go well. You can count on them for anything — well, just about anything.
One thing you shouldn’t count on your family for is a personal loan. Find out why borrowing money from your family is a problem.
A Shift in Dynamics
Sometimes, borrowing money from your family members can change the dynamics of your relationship. After getting the loan from them, you are no longer on equal footing. This inequality could make you behave differently around them.
You might feel embarrassed for having to ask them for money. You might worry that they’re judging your financial decisions from this point forward and that they think less of you. Or you might wonder if they’re going to hold this act of kindness over your head, reminding you of their generosity during your future family reunions.
Risking Repayment
Your family dynamic has a higher risk of changing when you can’t afford to repay the loan in a reasonable timeframe. You could permanently fracture your relationship if you end up borrowing more than you can repay right away. The emotional and financial risks of this situation are high.
What Can You Do Instead?
So, borrowing money from your family isn’t the best idea. What can you do instead? There are several alternatives that won’t yield the same emotionally devastating consequences.
Emergency Fund
Ideally, you should have an emergency fund sitting in a savings account. Your emergency fund can help you manage urgent, unexpected expenses that are well outside of your personal budget. All you have to do is withdraw or transfer the funds from your account and then pay to recover from the emergency.
You do not have to follow a strict repayment plan after using an emergency fund, but you should try to replenish the fund to the best of your abilities so that you have a strong safety net to rely on in the future.
Credit Card
What if you don’t have any emergency savings? Then, you can use a credit card as an alternative payment method for urgent, unplanned expenses. As long as you have enough available credit, you can charge the expense to the card and pay down the balance later.
Personal Loan
Another alternative that you could turn to in an emergency is a personal loan. You don’t have to visit your local bank branch to make an appointment — you can apply for an online loan through CreditFresh as long as you meet the qualifications. It’s a quick, straightforward process. If your application gets approved, you can use borrowed funds to cover your urgent expense.
A personal loan offers you the same benefits as a family loan without any of the emotional consequences. You don’t have to worry about facing judgment for requiring a loan out of the blue, and you certainly don’t have to worry about not being able to repay the loan in full right away. Once you’ve used the funds, you will be able to follow a steady repayment plan, where you pay off the amount bit by bit.
Your family shouldn’t be the first solution you turn to in a financial emergency. There are better options out there.