Borrowing

Getting a private loan from someone you know is nothing like getting a personal loan from a professional lending institution like a bank or a finance company. A bank will be most concerned about your ability to service the loan and security. Whereas, a major concern of someone you know will be the potential affect of the loan on your personal relationship. Fosik has some guidelines you should follow when you are thinking about getting a private loan and how to go about it.

Think of the Issues

Think everything through as much as possible before making an approach for a loan. Here are some of the things you should consider.

Do you really need the money?

Are there any alternatives to borrowing the money? Don’t rush in to borrow, even if you know a loan will be provided.

What is your relationship with the lender?

How well do you know the person who has offered to lend you money or you intend to approach for a loan? If it is a family member, how will other family members feel?

Can you live with yourself?

If the loan goes bad, would you be able to live with the shame and the guilt?

Consider the lender’s point of view
Does the lender know why you need the money?

A personal lender has a right to know why you need the money. Be honest and frank.

Can the lender afford to lose the money?

Just because you know the lender would agree to a loan, can they really afford it if it doesn’t work out? Would the lender be stressed out worrying about not getting the loan back?

How will your relationship be affected if the loan doesn’t work out?

You should consider how life might be with your family or friend after a bad outcome. It is better if this is discussed openly before setting up the loan.

What kind of an agreement would work best for the lender?

Consider the length of the loan and the structure of repayments. Consider what kind of security they may need and what you could offer.

Making the request (or How to ask for a Loan)

After thinking through all the issues, you should prepare yourself for the occasion where you will make the loan request.

Choose the time and place.

Try to pick a time and a place that you have previously spent time together. The idea is to eliminate distractions and to feel at ease.

Have a clear request and a plan for repayment.

Speak about the purpose of the loan, the amount of money you need and why a private loan is your best alternative. Speak about how you plan to repay the loan.

Offer assurances.

Providing full details about your repayment plan will reduce the concerns of the lender. Speak about the interest rate you are offering and, if necessary, the security you will offer.

You will eliminate many concerns when you explain how the loan will be properly documented using the Fosik Private Loan Kit. This will show you are serious and professional in your approach to taking and repaying the loan.

Use the Security Agreement in the Kit to provide a legal document about the asset which will be given as security. This will be sufficient for most situations.