Think carefully before you borrow money from friends or family. If you have a great idea for making money but bad credit, family and friends may be able to help.
Any time you take out a loan, you are taking on some financial risk. When you borrow money from family and friends, you get hit with two problems at once. There is risk and emotional stress.
A business plan that is well thought out and researched can be very effective, though. It can lower the risk and calm your nerves about emotional challenges at the same time.
When you talk about the promissory note, these things should already be taken care of. Before the promissory note is signed, both parties will need to agree on a plan.
The promise to pay
Your promise to pay back the loan is written on the promissory note. In the promissory note, there is a plan for how the loan will be paid back. This type of note is the basis for all loans that work out well.
Without it, not only would the lender's finances be at risk, but so would their relationship. Some of the ways the promissory note protects you are as follows:
- List the grace periods that were agreed upon.
- Clears up any confusion and keeps the relationship safe.
- It says how much you have to pay back.
- Sets the rates of interest.
- Gives the date of the first payment and the date of the last payment.
- It sets out repayment dates.
When you borrow money, you should always keep an eye on and evaluate your lender. A hesitant "yes" could mean "yes" because of how you two know each other. But if it wasn't, the answer would have been no. You could ease that worried "yes" by offering to put up your own money to back the loan.
You could use your brand-new Chrysler Jeep as security. This might be the thing that turns a hesitant "yes" into a full "yes" with a smile. You have to judge this kind of answer. Have a plan.
Maybe the low interest rate is more important to your lender than how safe your loan is. Stay in your groove. You know who it is. Once more, be ready. Give an answer. It could be that your product is only sold during certain times of the year. Adjust your payments for that time period so that they make sense.
Have you thought about a third person? A third person would make a lot of trouble go away.
When the note is signed and the money is given to you, you need to know when the money is due back. If you have trouble making payments, you should talk to your lender right away. Don't forget to pay your bills and leave your lender in the dark.
If you need to change the way you pay back the loan, talk to your lender about how to do it. Make sure you can talk to people. Guard your friendship. You don't want the main topic of conversation at Thanksgiving to be a broken relationship.
