If you find yourself in a financial bind, then you’ll have to consider all of your borrowing options – that, or else risk getting further and further into the hole. At first glance, it may seem that friends and family are a safe bet when it comes to procuring emergency funds. However, that’s not necessarily true. It may just be that you should do anything you can to avoid asking your friends for money, in favor of borrowing money the old-fashioned way: through a bank. Here are five reason bank loans are better than borrowing from friends:
Inconvenience
Banks are in business to lend money and create reasonable installment loans and contracts. Your friends are not. Chances are, when you ask a friend to lend you money, you are putting your friend through the inconvenience of having a shortage of personal funds, for the sake of helping you out – that is, unless you believe your friend has a stock pile of money set aside just for the occasion of lending to you.
Risk
Of course, you have nothing but the best of intentions when it comes to paying back money you borrow. But, there’s always a risk that another financial (or other) emergency could come up, making it impossible for you to pay back your loan on time. Do you really want to risk a friendship over this possibility?
Relationship Strain
It doesn’t matter how tight the relationship is – any time you spend time with a friend you have borrowed money from, there will be a big, white elephant in the room: “Is my money going to be paid back on time?” This can put a serious strain on the relationship.
Inflexibility with Other Purchases
A true friend will be around in the good times and the bad . . . and also when you make purchases. Do you want your friend feeling slighted every time you order fast food or pay to see a movie? Do you want to feel as though you have to avoid your friend every time you wear a new outfit? If not, then don’t borrow money from your friends.
The Banking Relationship
Banks are all business – plain and simple. When you take out a bank loan, you have all of the loan specifics printed out for you, on paper, and signed by all involved parties. There is no confusion down the line over what is owed and when – no “he said, she said” scenarios to cause any stress. A bank loan is a business transaction, and you can leave emotional hardship and hearsay at the door.
When it comes to borrowing money, it’s a good idea to preserve your relationships by sparing them of the stresses that can be caused by personal lending. Stick to your bank. After all, that’s what banks are for.