The general saying is ‘don’t lend money to friends or family’ and, although this can be true, taking a loan from a friend can be done without drama, as long as some key guidelines are adhered to. Below we will look at some useful do’s and dont’s when it comes to this subject, which can help to make things a little less awkward.
The best option is to always be honest and open about why you need the loan, and to set clear stipulations that cover both yourself and the person you are loaning the money from. Let’s go over some other useful pointers when it comes to borrowing money from a friend.
1: Be Transparent
Always be clear about the nature of the loan, whether it is for a business venture or for personal reasons. If there is a sense of dishonesty at the start, it can lead to early problems in the transaction. Remember to treat the matter earnestly, money is always a serious matter and when it comes to being the lender it is even more so. Let your friend know that you have given some serious thought to the matter and that you have a plan of action, providing them with clear intentions for the money.
Being clear and transparent will give the right feel to the conversation from the start and help down the line.
2: Terms are Important
Ensure that the terms laid out are fair and clear, the last thing you want to do is to put your friend in a predicament and risk the friendship. Things like interest and timeline are important for both parties involved, and will show your friend that you are serious about repayment. Paying interest will demonstrate to your friend that you appreciate what they have done for you.
3: Have Something in Writing
Now that you have thought about the terms, it is a good idea to put it in writing, this gives surety to the person you are borrowing from that they have something to prove the transaction and the terms you have laid out. Even an email or a handwritten note will usually serve to put your friend at greater ease. Remember that, as your friend, they may not want to ask for this, but you should insist.
4: Pick Wisely
Choosing the right friend for this request is more important than choosing the friend with the most money. Things to take into consideration are your relationship with this person, money is a very personal thing and someone that knows you well, and your situation, will be more inclined to assist you in this regard. Borrowing money from a friend you know well and trust will often be a smoother transaction, but communication will remain a big factor.
5: No Negotiation
When it comes to asking a friend for money, have a few options for them to consider. Haggling over the amount is only going to lead to frustration, and added to that, you never really know someone else’s financial predicament. If the terms that your friend lays out are not to your liking, then it is always better to politely decline than to press too hard and potentially cause friction in the friendship.
6: Respect the Answer
Be prepared to not get the answer you are wanting and to graciously accept. Being given money by a friend is not something that you can simply expect, and it should not be taken for granted. Putting pressure on a friendship is not worth it in the long run. There are always other options or other friends, and if this is the case then try to consider where you went wrong when making your proposal, perhaps you were a bit forceful, or your plan that you laid out was not clear enough.
7: Prioritise Repayment
Ensure that you do whatever it takes to make repaying your friend a top priority, you need to take the loan seriously and show your friend that your friendship means a lot to you and that you haven’t taken this for granted. Think about what would make this easier for yourself, like setting out an amount that you can put aside immediately after receiving your salary. 
Showing your friend that you truly care about your relationship is the best way to keep it intact, one way you can do this is to make sure that you pay the loan back before the agreed upon date, this not only shows them your seriousness to repay them, but it will also show appreciation for what they have done for you. Remember that friendships and the relationships you have with others should be cherished above any monetary amount, and if at all you feel like this ask would jeopardise that, then perhaps it’s time to consider other options, such as taking out a loan or raising funds.
If you’d rather consider taking out a loan through a professional lender then feel free to review the benefits of an RCS Personal Loan or scroll down to take a look at our loans calculator to get a better idea of what may suit you - both can be found here. RCS offers the following:
- Cash loans from R2 000 up to R250 000
- 12 to 60 months flexible repayment term options
- Built-in Customer Protection Insurance
- Potentially interest from as low as 15%
- Easy application process
- Cash in your account within 24 hours
- Get a provisional answer in minutes
There are many options out there to get the helping hand you need so no matter how complicated things may be, remember that there are people out there who will support you.
