Social Lending

Borrowing from Friends

Often we have friends who are better off than we are. If we are in financial difficulties it can almost make us jealous to see friends spending freely when we have to spend as little as possible. Some people even ask their friends for a loan to help them out of financial difficulties.

This can seem like a really good idea to start with. One person has money, the other doesn’t so why not borrow some from them. The lender may be happy to lend the money or they may not want to ruin the friendship by refusing. The borrower may be desperate but then feel always obliged to their friend for doing it. It can make for difficult times. There is also the questions of interest. Do you pay any, if so how much?

By getting a social lending company involved it could really help things. They will act as intermediary and it means that if a repayment isn’t made it will not be the lender that has to chase for the money. You can set the interest rate with them and so agree it all before you start and also the term of the loan.

Often with friends lending there is no repayment plan and no time limit and no interest. This can make things difficult if the lender is suddenly short of money or feels it is about time they had it back. With a plan in place, this avoids any of these concerns and is a great way to stop any confrontation about the money.  It also means that if a loan is required again, then it might be easier to ask because it was dealt with so well before. In fact the lender may wish to do it again because they could make some money out of it.