Posted On: 14-April-2022
When you run short of cash and you don't know where to get your money from to meet your financial needs read to know what you shall do. The most common option that people choose when they need financial aid is borrowing from friends and family. But that is something which puts friendships and relationships on a strain. To keep relationships and monetary affairs separate is a wise thing to do.
So what you could do in such circumstances is reach out to a financial institution for personal loan instead of asking your friends and relatives. A personal loan is a great financial tool that can be borrowed to meet your multiple financial needs that can be both private or personal. You can use personal loans to fund home repair or renovation, to fund weddings or to pay your other debts.
Applying for personal loans and getting it approved has now become much more easier with the bank's quick system of loan disbursal. It's important for you to know why you must apply for personal loans instead of borrowing. Thus you must read the points below.
When you borrow from people rather than taking personal loans the terms and conditions don't remain much clear. There is no clarity on the terms and conditions. You can avoid these situations by simply opting for a personal loan from any of the city's best financial institutions.
2. Predefined Repayment Schedules
When you borrow from your friends or family you do not get a predefined repayment schedule, which makes you pay either immediately or lately beyond a limited time. To avoid this what you can do is find a way to apply for personal loans with the banks. Doing this will give you clear predefined repayment schedule, having which it'll be easier for you to make repayments.
3. Not Hampering Relationships
When you borrow money from your personal relations they do not often charge you an interest rate. This doesn't allow the lender to earn anything by helping you. This may affect the lender who might later ask you for the loan amount back or who may ask you for an increased rate of interest. To avoid your personal relationships falling apart for monetary affairs you can rather take loans from banks which is a way better option.
4. Legally Binding
When you sign for a personal loan you also sign for all the legal terms that come with it. The borrower can never be forced to abide by the terms that are not there in the contract. Unlike this, there is no written contract when money is borrowed from a friend or family member, which puts you at risk.
5. Free From Obligation
One of the biggest drawback of borrowing from someone you know of is that you're constantly reminded of the favour you have taken even after you have cleared the repayment. This will make you feel that you must assist them when they are in need. To avoid feeling this obligation you can avail for a personal loan.
Now that we've demarcated the goods and bads of both forms of borrowing, it's upto you to decide which one is better and why.