Category: Lenders

Should you get a Loan from a Family Member?

Loans can be very expensive and so it can be wise to have a look around for the cheapest possible options. There also may be some people that have very little choice when it comes to loans because they do not have a good credit record. This means that they may not be able to borrow anything at all or they may only be offered extremely uncompetitive rates which means that the loan is just much too expensive. Therefore it is not surprising that some people turn to family members for help with their loan.

There are some very obvious advantages to borrowing money form family but there are also disadvantages that people may not be so aware of. If you borrow from a family member you are likely to be able to get the money quickly. They will probably have the money available easily and you will be able to therefore get it to you very quickly. This could be a fantastic help if you do need the money very quickly. Family may also not charge interest and so you may get a free loan or if they do charge interest, they may charge a lot less than other lenders would. This could mean that they are a much cheaper alternative as well. Repayments might be easier as well. They may not expect you to repay the loan using regular monthly repayments like normal lenders would. They may be a lot more flexible and let you pay them back when you are ready. They may let the loan be outstanding for a very long time or let you pay it back in very small instalments over a very long period of time. This could mean that it will be cheaper, more flexible and more readily available than other alternatives and so if you do have a family member who has money and is willing to help you out then it could seem that this would be a really good option for you.

However, things may not be quite as easy as this. You may find that you could risk falling out with your family member if you do not pay them back as much and as often as they wanted. Perhaps they might start running short of money themselves and you have not got the money to pay them back. They may demand it and there may be nothing you can do to get it. They may have expectations about how much you pay back and how often and you may have different ones and this could cause a rift between you. There is even a possibility that you may end up falling out and not ever making it back up to each other and this could mean that you could regret even asking in the first place. It could therefore be wise to make sure that you have a written agreement before you start as to what is expected with regards to repayments and this should help to make sure that you do not disagree with each other over this.

It is also worth considering the impact on other family members. There may be jealousy if you borrow money off someone and others do not have the opportunity. They may not have asked for the money and so just may not have been given the option. However, they may feel it is unfair as there may not be enough money left to lend them any if they do ask for it. It could not only impact you relationship with the jealous family member but it could have a wider impact and effect your relationship with many different family members. This could be far worse than any financial difficulties you may face if you do not take the loan.

So it is well worth thinking hard before you ask a family member to lend you money and before taking the loan. Make sure that you both agree on repayments and write it down, even if you agree that there is no fixed repayment schedule so that there can be no arguments about it at a later date. Consider whether it will cause friction with other family members and whether it is worth risking this.

Is Having a Local Branch Important When Choosing a Lender?

Local branches for lenders are becoming rarer. Some banks and building societies are closing a lot of their branches due to the cost and encouraging their customers to take part in online or telephone banking instead. These tend to replace the more old fashioned postal accounts, although some of these still exist as well. Some people have no problem with dealing with their lender like this, but there are others that prefer to have a local branch. It is worth considering the benefits of having a local branch before you dismiss it as an old fashioned factor to consider.

There are some benefits in being able to go into a branch and discuss things with someone face to face. You are more likely to get something resolved then and there and you can go in daily and ask about something that is not sorted out straight away. You may be able to get to know the staff members there as well and you may feel more comfortable talking to someone that knows you about any concerns you have rather than someone on the phone that you do not know.

Some people do not like making telephone calls. It can be easier talking face to face and a telephone call can be more difficult. It is not so easy to convey your emotions or to always explain things properly over the telephone and so some people feel a lot better doing it face to face. Some people just get a little nervous using the phone or others do not like talking to call centres and feel that they do not get a very personal service this way or do not like being on hold while waiting to speak to someone, but would rather queue in a branch.

Online banking is used by a lot of people but many feel that it is not secure enough for their liking. They would rather speak to someone at a branch and feel that the information that they are giving is more secure that way. There are also those that are not confident using a computer and so do not want to use it for their banking or they may just not have a computer at all. Others find that email or online messaging is not a method that they would feel comfortable using to communicate with their lender as they feel that it is too informal or too difficult to explain their point of view.

However, many people do manage to borrow money from a lender which has no local branch to them. They either conduct business by post, telephone or computer and manage well doing so. Some find it much easier because they can send messages at a time of day which is convenient to them rather than having to wait for a branch to open. It can also be much easier as they do not have to get to a branch but can communicate with the lender from home, work or anywhere they wish. They may find it a lot easier than having to find out when the branch is open and take the time to go there. These days a lot of people seem to be very short of time and so they would prefer to be able to deal with their lender at a time and place convenient to them rather than having to make a special effort to visit them.

Some accounts are not available as branch based accounts and this could apply to loans as well. This means that if you find one that is a competitive rate you may have to be prepared to put up with it being online or telephone based banking rather than a branch based account. However, the opposite may be true as well, with some accounts being branch based only.

So having a branch could be important to some people but less important to others. If an account is run only within a branch then you will need to make sure that there is a local branch that you can get to so that you can conduct any business that you need to there. However, most lenders do not require you to be near to a branch so this will not be an issue for you.