Before making personal loans, you should really think about why you are getting a loan, what you should expect from it, and how you can pay it off in the future before you even finalize your decision.
The idea of personal loans have evolved over the years, although since the circumstances under which these have been made are not always the same for every person who has gotten a loan, strict universal guidelines do not exist. This is exactly the reason why thinking about why you are getting one should be really thought about before you make a major decision such as this.
If you are securing a personal loan for a family member in need of money, remember that a loan is different from a gift. A gift, by definition, does not come with the expectation that it should be repaid. On the other hand, a loan does. When making a loan, you should make sure that the person in need of money should sign something before accepting the money to make sure that they pay the loan back in full.
You should also know that, as the person lending the money, you are entitled to ask the following questions:
- What is the money for? It is your given right to know where the money is going to be used, regardless if it is a large or a small amount. If you do not agree with the reason, you have the choice of proceeding with or rejecting the request.
- How long will it take before they pay back? The debtor should also provide you with an idea of how long it would take to pay the money. If the loan is a bridge loan (a type of loan that will be paid in the next pay check), then knowing when they will pay will not be a problem. However, if the loaned amount is high, you might want to settle a deadline with the debtor.
- What is the financial situation of the debtor? Sure they may have agreed on a deadline and promised to pay, but how sure are you that they could follow through? It is your responsibility to make sure that the debtor really has the financial capacity to pay you. This conversation might not be comfortable, but it has to happen.
Take all of these into consideration, and if you do not agree with what they are saying, you can always refuse. This, however, should not be taken to mean that you are unwilling to help. Companies like Mangomoney would be able to help with any problems with personal loans.