When you need money, and you have bad credit, sometimes it can seem more straightforward just to ask your friends or family for support. But should you? There are many benefits and drawbacks to borrowing from friends and family.
Borrowing from family and friends can provide emergency money quickly when you need it. This avoids high-interest rates such as a payday loan or doorstep lending. It also allows you to work with lower figures such as a few hundred pounds. You would be unlikely to get this from standard market lenders.
However, unless both of you are certain it will not harm the relationship should you not repay the money, then you should be aware that this could end your relationship. It is must less risky to go for a payday loan or another form of a loan from a reputable lender.
As an alternative, you could look for a bad credit loan. A bad credit loan will allow you to take out a loan with a guarantor, so you can get the money you need without worrying about your bad credit. As a bonus, when you repay the bad credit loan promptly, your credit rating will improve. So, a bad credit loan could, therefore, be the correct option for you.
It is very risky to take out a ‘loan’ from friends or family. Borrowing money from friends and family has been known to ruin relationships and split up family members. So you should avoid borrowing money from your friends and family. Perhaps instead rely on other methods of income or lending.
If your friends or family are looking to help you out by lending you money, perhaps offer them the chance to be a guarantor for your loan. This means you will borrow the money from a lender, but the friend or family member will agree to pay your repayments if you default. Therefore giving you access to better loan rates and larger amounts.