How to Borrow Money From Friends
Borrowing money from a friend may be necessary if you are in an emergency situation or if you have no other way of obtaining money. Make sure that before you borrow money that you know exactly how much you will need and how you intend on paying back the loan in a timely manner.
- Choose a friend who you feel would be willing to let you borrow money and explain to them your financial situation. You will want to let them know exactly why you need extra money and why you can't get funds from other avenues.
- Ask your friend for the exact amount of money that you need to borrow and explain why you have come to this exact dollar figure. You will want your friend to understand that they are letting you borrow only the amount of money that you really need.
- Discuss paying interest on the money that you will be borrowing. This rate should be reasonable and agreed upon by both you and your friend.
- Set up a promissory note to indicate how much money you are borrowing, when the loan will be payed back and what kind of interest rates you are applying to the loan. Think about setting up a schedule of monthly payments in your agreement if you are not able to pay back the full amount of the loan at one time.
- Make payments on your loan in a timely manner as indicated in your promissory note. Get receipts from your friend when you have made your payments so that you can keep paperwork indicating when and how much has been payed on the loan.
- Make sure to write up a letter indicating that the loan has been repaid and that the conditions of the loan have been satisfied completely when you have finished paying back your friend. This document should be signed by both you and your friend so that there is no confusion in the future about whether or not the loan has been satisfied.