8 Reasons Why a Personal Loan is Better Than Taking a Loan From Friend or Family

Asking for a loan from a friend or family may seem like a quick and easy option to get funds. However, involving your family or friends in your financial situation may cause awkwardness or strain your relationships. So, it is best to keep relationships and monetary affairs separate.

Instead, you can opt for one of the many alternative solutions offered by a majority of financial institutions. One of these is a personal loan, through which you can comfortably get funds without risking your relationships.

Read on to learn why you should opt for a personal loan instead of borrowing from your friend or family member.

Limited Funding

As per your eligibility, banks and NBFCs can offer loans of up to ₹5 lakhs and more. However, you cannot be sure that your friends and family have the same quantum of funds available to lend to you. 

Strain on Relationship

In the event that you can’t repay the amount on the promised date, complications can arise within the relationship. Money-related problems can often devolve into strife, arguments, and other such issues, which can be avoided with a loan from an institution. 

Ambiguity in the Terms 

If you borrow from a friend or family member, verbal communication can create confusion, leading to conflict. However, borrowing from a lender, the loan terms and conditions are transparent from the get-go.

No Monitoring of Fund Use

If you take a loan from a lender, you can use the funds without restrictions. On the other hand, you may feel obligated to inform your relatives or friends about your financial plans if you borrow from them. 

Repay with Easy EMIs

When your family or friends lend you money, there may not be a fixed repayment plan. The lack of structure and details can lead to stress on your finances and relationships. On the other hand, borrowing from a lender means you have to stick to a schedule. Generally, you pay off the loan in monthly instalments, which helps avoid any undue financial burden. 

Also Read: 5 Ways to Repay a Loan at Ease

No Impact on Credit History 

When you borrow from someone you know and repay it on time, there is no impact on your creditworthiness. On the other hand, repaying the lender on time helps build a repayment track record. This boosts your score and can help you get an affordable loan in the future without any hassle.

Tips to Choose the Right Personal Loan

Keep the following points in mind to pick the right option:

• Compare multiple interest rates to choose the most affordable option
• Check the online reviews and testimonies to assess the reliability of the lender
• Confirm that you meet the lender’s eligibility criteria to improve the chances of approval
• Check all the fees and charges levied by the lender to keep costs in check
• Choose the most suitable tenure to enjoy manageable EMIs
• Use an EMI calculator to find a comfortable repayment plan 
• Read all the terms and conditions carefully before accepting the loan offer 

With thorough research and these tips, you can easily choose an ideal lender to enjoy stress-free borrowing. Fibe is among the leading lenders offering funding of up to ₹5 lakhs instantly and at affordable rates.

The Fibe Instant Cash Loan comes with no end-use restrictions and no pre-closure charges. Furthermore, you can enjoy flexible tenure options from 3 to 36 months, minimum paperwork, rapid disbursals, easy online loan tracking and more. 

Download the Online Loan App from the Google Play Store or Apple Store or visit our website to apply from the comfort of your home!

FAQ on Loan From a Friend or Family

What are the disadvantages of obtaining a loan from a friend or a family member?

Here are some of the drawbacks you should know: 

• Lack of clarity in loan terms can hurt your relationship 
• Involving a relative in your personal finances can make things awkward
• Conflicts can arise and add stress in instances of non-payment
• You don’t have a structured repayment plan and may have to repay in a lump sum

Why is a personal loan better?

Here are some of the key advantages of getting a personal loan:

• You get a lump sum funds for all big-ticket purchases and urgent requirements
• It is quick and easy and requires minimal paperwork 
• It does not require collateral and comes at affordable rates
• It allows you to use the funds as you like, with no restriction or justification required 
• It has a comfortable tenure option to manage your repayment