When faced with a financial shortfall, borrowing from family or friends may seem like the easiest solution. While loved ones may be willing to help, mixing money with relationships can lead to misunderstandings and tension.
Rather than risking strain on cherished bonds, opting for a personal loan offers a more structured and reliable alternative.
Reasons Why Personal Loans Are Better Than Borrowing from Relatives
1. Clarity and Transparency in Loan Terms
When borrowing from friends or relatives, loan terms are often based on verbal agreements, lacking clear details on repayment timelines, interest rates, or late payment consequences. This ambiguity can lead to confusion and disputes.
On the other hand, when you take an instant personal loan from a trusted financial institution such as SMFG India Credit, all terms and conditions are clearly outlined.
Loan agreements typically specify the repayment tenure, interest rates, and provide a detailed breakdown of fees and charges (e.g., processing fees and prepayment penalties). Additionally, customer support is available to address any queries, offering peace of mind.
2. Structured Repayment with EMIs
Repaying a loan borrowed from a family member is often unstructured, relying on goodwill rather than a set schedule. If you are unable to repay on time, it can lead to awkward conversations and strained relations.
A personal loan comes with the benefit of fixed EMIs, allowing you to repay in manageable monthly instalments. Using a personal loan EMI calculator helps plan repayments according to your budget, promoting financial discipline and reducing uncertainty.
3. No Strain on Personal Relationships
Money matters can create tension in relationships. Borrowing from a relative may lead to unexpected complications, such as:
- They may need the money back earlier than expected, putting pressure on you.
- Delayed repayments can lead to feelings of discomfort.
- Conversations about money can become awkward or create distance.
- The lender may expect favours in return, leading to an unspoken obligation.
Opting for a personal loan prevents these complications. Borrowing from a reputed financial institution ensures that your relationships remain unaffected by financial matters, allowing you to maintain healthy and stress-free connections.
4. Access to Larger Loan Amounts
When borrowing from family, the amount you receive depends on their financial situation. They may not always have the funds to lend, limiting the support they can provide.
Financial institutions, on the other hand, can offer instant personal loans as high as INR 30 lakhs*, based on your eligibility and their internal policies. This ensures you receive the amount you need without depending on the financial capability of others.
5. Freedom in Using the Funds
Borrowing from friends or family often comes with unspoken expectations about how the money will be used. You may feel obligated to explain your financial plans, leading to discomfort or unnecessary discussions.
When you apply for an online personal loan, you have the freedom to use the funds as you see fit – whether for medical emergencies, education, home renovation, or travel.
6. No Impact on Social Reputation
Difficulty in repaying a loan from a relative can affect your standing within your family or social circle. You may face judgment, strained relationships, or even social awkwardness.
With a personal loan, your repayment history remains private, preventing any potential damage to personal relationships or social reputation.
7. Positive Impact on Credit Score
Another potential advantage of taking a personal loan is that timely repayments can contribute positively to your credit score. Borrowing from friends or family does not affect your credit history, but repaying a formal loan on time helps build a strong credit profile, making it easier to qualify for loans in the future at favourable interest rates.
Conclusion
While borrowing from relatives may seem convenient, a personal loan offers a more structured and professional approach to meeting financial needs. With clear terms, fixed repayment schedules, and the added benefit of building your credit score, personal loans enable you to achieve your financial goals without straining personal relationships.
For a smooth borrowing experience, compare multiple lenders, review their credibility through online testimonials, and assess not just interest rates but also additional fees and charges such as processing fees.
*T&C apply. Loan eligibility, loan terms, and loan disbursement processes are subject to the lender’s policy at the time of loan application.
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