Think About Your Relationship
When a friend or family member is in trouble and asks for a loan, or if a loved one gives you a loan, it's not a matter to be taken lightly. Money can damage the strongest of relationships if both sides aren't careful. The delicacy of such matters bears repeating: Personal loans should not be made hastily or without proper documentation appropriate to both parties' goals.
The lender should enter the agreement for the following reasons:
She sees an opportunity to help a trusted friend or relative.
She has an opportunity to earn a little more on her investments.
The loan is a good fit with the rest of her financial structure.
Such an agreement won't alter her good relationship with the borrower.
Such an agreement won't alter her good relationship with other close family members.
The borrower should enter the agreement for these reasons:
He has an excellent opportunity at a better mortgage deal than he would from a commercial lender.
He trusts his lender to structure a fair deal.
The loan is a good fit with the rest of his financial structure.
Such an agreement won't alter his good relationship with the lender.
Such an agreement won't alter his good relationship with other close family members.
If borrower and lender find that any of the above issues don't fit their situation, it may not be the best situation for either party.
