How to Approach a Friend for a Personal Loan

When people get into financial trouble, they often have a hard time asking relatives or friends if they can borrow money.  The truth is, some of your relatives and friends may be happy to help you out in these times of economic hardship.  If you can gather up the courage to ask for a loan from a friend, you can put yourself in a great position to improve your financial state.  Read on for a step-by-step guide on how to ask your friend for a personal loan.

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Step 1.  Evaluate your financial status.

Before you even think of who to approach about a personal loan, you should first fully understand your financial status.  Grab your latest credit report to gather information on your credit accounts, debts, and your overall financial situation.  See if there are any way that you can improve your financial status, such as by paying debts or closing unnecessary accounts.  You need to know exactly where you stand.

Step 2;  Communicate your situation with your friend.

The next step is to think of whom you can approach for your loan.  You should only choose a friend who trusts you and who you trust as well.  Asking for a loan from a friend is a very personal issue, and trust is vital in making the arrangement work.  When you approach your friend to ask for a loan, be open about your financial situation, why you are in this position, how you plan on getting out, how the loan can help you, and what you are going to use the money for.  Remember, communication is the key in making loan arrangements that are beneficial to both parties involved.

Step 3.  Negotiate openly when you ask for a personal loan.

Now that your friend has a clear picture of your financial situation, it is time to ask your friend for a loan.  Keep your friend’s financial state in mind as well, when you ask for a loan.  Be completely transparent and open about negotiating with your friend and make sure not to make your friend feel uncomfortable about the issue.  You may want to set up certain terms and conditions, such as the terms of payment and interest rates, if you want to make a more structured proposition.  In the end, your goal is to get a personal loan that will help you get in a better position financially, while respecting your friend’s needs and feelings as well.  Although you are dealing with financial difficulties, your relationship with your friend should be your primary concern.

Remember that even if you’re asking for a loan from a friend, there’s still a chance for you not to get that loan.  He or she might have other financial needs to think about.  Keep this in mind so you can handle the rejection or negotiation well.  If your friend can’t help you, you can at least ask for financial advice or referral to a lender that can offer you better deals.

 

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Comments

  1. In cases such as this, trust is always a factor. And it is greatly affected once the borrower is not able to pay his/her loan on time or even decides to hide or run away from his/her friend, in which leads to more and more problems. So remember before even thinking about borrowing from a close friend or relative, know where you stand first, know whether this is absolutely need and negotiate with your friend on when you him/her back the money you owe and discuss any terms and conditions so that you can avoid any future misunderstandings and mishaps.

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