How To Arrange A Personal Loan From An Individual
When looking to obtain a personal loan from an individual such as a family member or friend be as professional as you would with any bank or credit union officer. Even though you are familiar with this individual do not take your relationship with them lightly or expect anything from them that you would not expect from a financial institution. Many personal relationships have been ruined by borrowing and lending money and any steps that can be taken early to protect against that outcome will benefit both parties in the long run.
First and foremost, layout a clear plan for both the reason for the funds and your ability to repay. Explaining what the funds will be used for may seem unnecessary but it helps build trust and confidence in the person lending the money that the resources will not be used for frivolous purposes or wasted unnecessarily.
Explain the conditions under which you would like to borrow the money by stipulating what is to be gained for the lender in terms of interest-rate and when can they expect their money to be repaid. By clearly outlining how much you want to borrow and how much will be returned and at which dates in which amounts in the future will go a long way to making the lender feel at ease with issuing the loan.
Once everything has been thoroughly discussed now is the time to put the loan agreement in writing. Any time money is provided by one individual to another or one business to another all specifications should be outlined in writing primarily for legal remediation should the loan not be repaid. A common phrase is that if it is not in writing then it didn't happen so this will be proof of how much was borrowed and under what terms the amount was to be repaid to the lender.
For certain loans this may be enough and both parties can sign two or more copies to make sure everyone involved has a copy of the agreement. For other circumstances, especially those dealing with larger loan amounts, it may be necessary or prudent to take the filled out forms to your local bank or other financial institution to have them notarized and witnessed. This is an additional level of protection to make a loan agreement more official and may put the lender at ease.
The key to obtaining a personal loan from an individual is to be as professional as you would be with any financial institution. A high level of professionalism is often respected and appreciated and is more likely to result in that individual lending you money. The inherent risk in this type of loan however is ruining a personal relationship so take the loan very seriously and make all payments on time and for the amounts agreed. The family member or friend making the loan is trusting you to be honest and responsible and may be your last resort for receiving assistance. Don't make them regret helping you out because if you do right by them today they are more likely to assist you in the future.
