When you were young and jobless, the only real way you could earn some bit of spending money is by doing things for your family. Either cutting the grass or taking out the trash, a few dollars are sent your way for doing these minor tasks. This is what family does, they back each other up regardless of what path is in their way. Now that you are older and need to get something like a car, a home or something high ticket, you try and seek your family and see if they could help out. Unlike in the days of your childhood, there is a lot more at stake with your family when it comes to lending money.
The first major thing is a loan is a contractual agreement, which is legally binding. Just like with a bank, the family can go after you in small claims court if the loan is not repaid over time. While dealing with a bank in a courtroom is not a good thing, yet dealing with the family in the courtroom and at the Christmas dinner table isn’t going to be very fun either. Money, as the adage goes, is the root of all evil and causes some of the most problems in the world. Money hurts friendships, but you can always get more friends down the road. You only have one family (unless you get married, but that will still only two families your whole life) and you cannot pick your family members at all. Strained relations with your family is going to be the worst experience in your life and going to make things difficult not only for you, but also your spouse and children. However, there is a very good side to borrowing money from family, or lending money to other family members. You know who they are, you know where they live because you need to mail Christmas cards every single year.
There is also times where lending money to family members help start on a good credit history. When a parent co-signs a loan for their child, it will not only help the credit rating of the child to get a good head start, but the bank or office will know that if the child is having problems, the parents will step up and make sure the loan is paid off. Parents and family wants to do everything possible to make sure everyone succeeds in life, especially when it comes to money.
