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In Nigeria, people often rely on their networks for financial support, and this therefore means that borrowing from loved ones can either strengthen relationships or lead to strain. Before you ask for that loan from your family or friend, there are several things to consider.
1. Assess Your Financial Situation
Before borrowing from friends or family, it’s important to first do your homework by having a clear assessment of your financial situation. Do you really need the loan, or are there areas you’re spending money on that you can cut down on to manage your current financial problem? Asking yourself tough questions might save you from unnecessary debt. Also, consider other options like saving or taking on extra work, if possible.2. Be Honest About Your Situation
When borrowing money, the first thing you should do is be completely honest about why you need the loan. Whether it’s for a pressing need like rent or school fees, or for something personal, be clear with your lender. Even the banks will ask you questions about the purpose of the loan before they approve it. So, don’t feel bad when that friend or family member asks what the reason you need the money. He or she deserves to know as it goes a long way in ensuring your friend or family member feels comfortable helping you.2. Know How Much You Really Need
One common mistake when borrowing money is not being clear on the exact amount needed. If you’re unsure of how much to ask for, you risk either borrowing too little, which won’t solve your problem, or too much, which can burden both you and the lender. Sit down and calculate the specific amount you need to cover the situation. When you are borrowing from friends or family, you should always avoid asking for more than necessary, as this can come across as greedy or irresponsible.3. Have a Clear Repayment Plan
One of the biggest mistakes you can make when borrowing from friends and family is not having a clear repayment plan. It’s easy to assume that because they’re close to you, they won’t mind when you pay back. This is a wrong assumption!Sign up for the Connect Nigeria daily newsletter
Make sure you have a clear and realistic timeline for repayment that both of you can agree on. Let your friend or family member know exactly when you plan to return the money as this will show you’re serious about returning the money and will save you from any future misunderstandings.
4. Consider How This Will Affect Your Relationship
Before borrowing money from a friend or family member, think carefully about how it might impact your relationship. Money has a way of changing the dynamics between people, especially when the borrower fails to repay on time. If there’s a chance the loan will strain your relationship, you may want to reconsider whether asking for financial help is the best option. Always think long term. Ask yourself, is this loan worth risking a valued friendship or family tie?5. Put Everything in Writing
When borrowing money from family and friends, it’s easy to want to skip formalities like written agreements. But from experience, this can be a big mistake. Putting your borrowing agreement in writing is not a sign of distrust; rather, it’s a way to avoid future misunderstandings. This doesn’t need to be a barrister-drafted agreement, just simple document stating the amount borrowed, the agreed repayment period, and any other terms agreed. You might say is it not just ₦20,000. You’ll be surprised at how a lack of clear communication on even ₦50,000 can lead to tension.Register to attend the CN Business Mixer
Concluding Thoughts
Borrowing from friends or family can provide immediate relief, but it also carries risks if not managed properly. Before approaching your friend or family for financial assistance, make sure to follow the tips listed in this post. This will help you minimize the chances of money getting in the way of your relationships. Borrowing money doesn’t have to be a stressful or relationship-damaging experience if you approach it with honesty, clarity, and respect.Got a suggestion? Contact us: editor@connectnigeria.com
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