Which is more advisable lending money from bank or friend?

Ajebo25

Verified member
There are many reasons to which people borrow money some people borrow money as capital to start their business while some use it for medication other people use it for emergency and some for personal use only but the one thing you should always think of whenever you want to borrow money is how you are going to pay the money back because borrowing money is easy but returning it back is when it becomes a problem there are many ways by which you can get money bank usually offers money to people in exchange for collateral if you don't get the money back to the bank before the agreement date which you signed that you were going to return the money the property which you left as collateral will be taken by the bank without refund you won't be able to retrieve it ever again.

Now this is the more reason why people like borrowing money from a friend or someone they know because they can easily go to that person and still talk to him or her to give them more time to pay back the money unlike the bank where they work with time you can't go there and pick them when it is time for you to pay your money back and didn't pay so which do you think is advisable to lend money from a friend or the bank?
 

Rachael

Verified member
Personally, I would never subscribe to lending money to a bank or friend. Going by your thread title, lending is the action of allowing a person or organization the use of a sum of money under an agreement to pay it back later. For me, it is better to work for my money and save it in bits till it matures then I utilize it than lending money. Well, even if I happen to lend money, I'm not a kind of person that have peace of mind until the debt is being cleared but this does not apply to everyone. It is not in my habit to borrow money from people.

I've seen lots of people who derive joy in borrowing money from people, and refuse to return it until you ask them. This has been a very disturbing situation which has made many people make up their mind not to engage in further lending. As it stands, instead of lending money to a friend, I prefer to lend it to a bank this is because, there is no time when I try to be good within my power, my friends always feel like I owe them the responsibility of giving them free money
 

TOZZIBLINKZ

VIP Contributor
Personally I do not concur or recommend any individual to borrow money possibly from the bank or from private individuals who possibly her colleagues and friends to him or her just to establish a business on implement a particular business idea this is because in most prominent cases business ideas may not go as planned and if the capital you use in establishing such business idea is being borrowed as a local possibly from the bank or from private individuals it's always lead to problem and uncalled frustration and trauma . If an individual may run out of choice but to borrow money in order to establish his or her business I will personally prefer that he borrows money from a friend or a close colleague of his or hers .

This is because borrowing money from the bank and having the inability and the capability of not being able to pay back in due time , totally makes you become an enemy of the State and you could even go to jail or prison as a result of this . But if it was a friend you could settle the matter amicably possibly the friend could add more time so that you can accumulate a money to repay back .
 

sincerem

VIP Contributor
If you have a friend that is willing to offer you loan for a business start up then,it is the best you can get. Because you true friend wouldn't charge you much when it comes to starting a business of your own and it wouldn't take you much process to get it. Not like the bank, where you'll undergo processes before you get the loan you asked for. I prefer taking from a friend than in the mortgage bank. But, majority of our friends wouldn't show up to us even if they have the money. Even from your own biological family is hard to come by, it isn't easy for anyone to lend you money for business start up. You can get from the mortgage bank, of you meet the criteria for their loan. But if you don't,you wouldn't get one. Most of their interest rate aren't high, but you should be wary of it's repayment date. Mortgages takes very serious of their loan repayment. Most mortgages charges extra fees as penalty when the deadline elapse. And also, it reduces your credit score, which means that, when your credit score is too low you get blacklisted from getting any new loan from any loan company.
 

Sodiq

Active member
I also shared the same opinion with you @Ajebo25. Borrowing from a friend is much more better and quicker than when borrowing from banks. Borrowing or applying for a loan from friends comes with a lot of easiness than when borrowing from banks or corporate firms. Borrowing from your trusted friends and family has several advantage than the loans you borrowed from banks.

Borrowing from your friends partially means you are not going to pay back with any interest nor charges when returning the money. you can also be paying back the money gradually as you deem fit. However, you might not get the actual email amount you request for unlike banks and corporate firms that can give you your requested amount. Your friend might also decided to give you the money totally without any string attached. Though this is based on what level are your friendship.

However, one if the negative side of lending your friend money is that you can loose your friendship or loose your money in the course of collecting your money back. But personally i don't subscribe to borrowing huge amount of money from banks or friend because what you are planning to use the money for might eventually not successful.
 

Augusta

VIP Contributor
I'm no advocate of borrowing money from anywhere, because anyone that goes borrowing goes sorrowing but if I'm still faced with the option of choosing then I will go with borrowing from a friend. The condition or conditions a friend will give will be milder than that of a Bank.

Bank loans come with high interest rate and there's always a fast return duration. I know it my cousin that got a loan this week and was expected to start paying from next week. I was wondering how they expect such from someone that wants to invest the money in a business. Again banks would need a collateral sometimes even with very small loans and if you default in payment then your asset you used as a collateral is gone.

But with a friend you might not face all of these as the friend will be kinder with his or request. Most friends would not even need any interest just make sure that the money you have borrowed is returned and that's all. Even the duration of repayment will be made by you the borrower. A friend would want you to suggest a time that would convenient for you to make a repayment which is the best way
 

Kingsley

Valued Contributor
It is always better to access loansfrom friends and family members rather than going to banks and other microfinancial institutions for loans, this is so because when we consider the rigour of accessing loans from banks as compared to that of friends we will realise that accessing it from friends would be far easier and cheaper than accessing from banks. Banks would involve collateral and there would also be some sort of financial implications that will make it somewhat cumbersome to access. Then in the case of a default in terms of repayment then it would certainly result to a huge loss because the banks would never be patient enough to get for the business to recover but will immediately lay claims to the property of the business or to the initial collateral that was presented before them.

But on the other accessing loans from banks could be advantageous because it will in still some level of seriousness in the business owner rather making him or her feel relaxed, business owners normally stay on their toes working very hard to meet up with the loan obligation and this also helps them to excel in their businesses aswel. And it helps to curb the stigma that might arise from borrowing from friends.
 

Sotherefore

VIP Contributor
It would depend on so many things . One of the most important thing is my relationship with the friend I am interested to borrow this money from . As we all understand , there are some of your friends that you can't possibly borrowed money from because of so many reasons.

Another possible reason why I might not likely be comfortable to borrow money from my friends is because money issues is likely to cause problems between friends most of the time . In this case I'll always try as much as possible to avoid anything that could make me get into trouble with someone I am having as friends.

If I borrow money from the bank , it will be much more simpler because I will know it is an official company and I will try as much as possible to raise back the money and paid on time .

The same may not be applicable if I am borrowing money from a friend because in most cases since it is not an official organisation , I will likely relax and if care is not taken I may not likely be able to pay back the money I have collected .
 

Holicent

VIP Contributor
The answer to this question depends on your personal situation. In general, a friend or family member may be more willing to help you out of a financial crisis than a bank would. However, there are some important differences between lending money from a friend versus borrowing from a bank.

Consider the following factors when deciding whether to borrow from friends or family:

Borrowing from friends and family can hurt relationships. If the loan is not repaid as promised, this can make future interactions awkward and uncomfortable. It may even strain the relationship beyond repair if feelings are hurt over the debt repayment issue.

Borrowing from friends and family may involve higher interest rates or fees than borrowing from banks. Banks have strict rules about lending money and will often charge higher interest rates for loans because they cannot afford to take risks with their capital. The interest rate charged by friends or family members is usually determined by how much they feel like lending — which could be considerably more than what banks charge for similar loans.

The terms of the loan agreement will likely be less structured than those offered by banks since they will not have established policies that govern their lending practices. This means that it will be harder to predict exactly how much money will be borrowed or when it will be paid back in full. However, some friends or family won't charge any interest on loan, but they might really deal with you than expected if you fail to pay back at due time.
 

cmoneyspinner

Active member
If a friend is gracious enough to loan me the money and trust that I will repay them, I would definitely take money from a friend. It is not likely that the friend will require collateral in the case of default. It is not likely that the friend will report my delinquent payments to the credit bureau. If I can not make a payment by the required due date because I have a legitimate reason, a friend is likely to be more sympathetic to my current state of affairs. There are all kinds of positive reasons from borrowing from a friend as opposed to a financial institution.
 

Suba

Moderator
Staff member
In my opinion, which one is more advisable to borrow money from a friend or a bank, it really depends on the importance of using the money. If we need fast money for emergency purposes and the amount is not too large, we can borrow from a friend, and even then it would be better if we provide a guarantee in the form of a letter. vehicle ownership or home ownership certificates, to reassure our friends that we will not run, and are expected to pay off debts in a short time. But if we need money as additional capital for the development of business products, it would be better if we borrow money from the bank for the long term, with installments and interest that has been determined every month.
 

King bell

VIP Contributor
There are pros and cons to both lending money from a bank or a friend. I would personally prefer lending from a bank because of the interest rates and repayment terms. However, some people may prefer to lend from a friend because of the personal touch and connection.

Here are some pros and cons of each option:

Lending from a bank:

Pros:

-Interest rates are often lower than other lending options

-Repayment terms are usually more flexible

-You may be able to negotiate a lower interest rate

Cons:

-You may need to have good credit to qualify

-The application process can be lengthy

Lending from a friend:

Pros:

-The personal touch can make the experience more enjoyable

-You may be able to get a lower interest rate

- repayment terms may be more flexible

Cons:

-It can be awkward if things go wrong

-You may not be able to get your money back as quickly
 
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