Borrowing from Relatives--Good Idea or Bad Idea?

[jrwilheim]

Does anyone have an opinion about borrowing from relatives? Do you feel it's okay only for major purchases like a car/house, etc., or is it okay to use a relative as an alternative to a credit card? Do you feel that borrowing ruins an otherwise good relationship, or that it's just part of what it means to be a family?

Me: I've borrowed a bit under $2K from my grandmother for furniture and a television set. She charges me 3%, much better than the banks, credit card companies, or furniture stores would. My cousins and my uncle and aunt seem to treat her like a piggy bank and borrowed money from her just so they could buy investment real estate.

Do you think there are any limits to how much you should take advantage of a relative's willingness to lend?

[paiger81]

I think if you pay it back you are golden, but my father was screwed by his brother, so I'd only lend large sums of $$ to family in extreme cases.

[wordsmith]

Necessary evil in some cases. I've only done it in emergency circumstances...like a car repair I could in no way afford to make. I don't like it, and my family's cool about money. I can't imagine if they were the sort where it was a big wedge driven between us, it's bad enough as it is. They'd rather I ask them for it than borrow it from a bank, though. Although they couldn't ever loan me a large amount, because they don't have it to give. That's probably a good thing. I wouldn't ever do it for stuff that wasn't a real need, though...like medical bills or something of that nature. I can't see doing for just random purchases.

[marcy]

My parents have always been receptive to lending my sister and I money,and we have always ALWAYS paid them back in a timely matter. Neither of us have needed to borrow money in years, but when we did my parents implemented a very precise payment plan. It was never "Just pay us back when you can". It was always "Please sign this contract stating that you will pay us X amount of money each month for X amount of months". The system worked well for everybody involved because there were very clear expectations.

[jrwilheim]

Necessary evil in some cases. I've only done it in emergency circumstances...like a car repair I could in no way afford to make. I don't like it, and my family's cool about money. I can't imagine if they were the sort where it was a big wedge driven between us, it's bad enough as it is. They'd rather I ask them for it than borrow it from a bank, though. Although they couldn't ever loan me a large amount, because they don't have it to give. That's probably a good thing. I wouldn't ever do it for stuff that wasn't a real need, though...like medical bills or something of that nature. I can't see doing for just random purchases.

Yeah, I'm not eager to borrow for just random purchases, but I don't have a lot of access to credit right now and my grandmother is usually willing to lend me the money if it's for something reasonable like furniture I need, but I wouldn't want to use it for every little thing the way I might use a credit card. On the other hand, borrowing from her at 3% is hard to pass up when my credit card is 18.9% and only has a $350 limit.

[jrwilheim]

My parents have always been receptive to lending my sister and I money,and we have always ALWAYS paid them back in a timely matter. Neither of us have needed to borrow money in years, but when we did my parents implemented a very precise payment plan. It was never "Just pay us back when you can". It was always "Please sign this contract stating that you will pay us X amount of money each month for X amount of months". The system worked well for everybody involved because there were very clear expectations.

My grandmother never insisted that I sign a contract, but I sent her an amortization schedule for the money I've borrowed. I think if I hit a real disaster like losing my job or something like that, she'd let me suspend payment for a little while but ultimately would expect that the debt be paid off.

[tina1979]

my parents have lent my sister and I both money over the years, usually its a pay us back when you can, but sometimes it was a "ok, i need this back by this date". I borrowed some money from my grandmother once and we had a very precise payment plan. I had money direct deposited into her bank account until it was paid off in full.

I think as long as the family member has the money and they are ok with it, it should be fine. Just be sure that you will have the funds to pay them off in the manner that was agreed upon

[shimmer728]

I rarely borrow money from my parents, but when I do, they've never charged me interest. My mom, at least, is the kind who demands EVERY LAST CENT be repaid.....I mean, if I borrow $5, I must pay her back!!!

Actually, come to think of it, I owe her $30 for a parking ticket. Damn. :neutral:

[AmbrNrgy]

My parents paid for pretty much everything except for entertainment/clothing up until I graduated from college. I thought that was a common thing, because that was what happened to everyone around me. I guess I just grew up with very - i don't to say spoiled, because they're good kids - just privileged children.

When they stopped providing the funds, I didn't ask for any. It was just assumed that - well, you're 21 now...you should be self-sufficent, which is true, but it was harsh for someone who had been supported maybe 80% by parental units. I got laid off, and didn't ask for money. They told me that I should have, instead of using my credit cards to stay afloat. I just didn't want to ask, though. I guess some of us are just lucky to have parents that are willing to lend some financial help. I think they'd help me pay off my cards, but I didn't want help. I feel like I got myself in the mess (which I'll be out of in less than a month - i only have $500 left to pay off on my card) and I should get myself out of it to prove to them that I can be responsible. Who would want to be bailed out by the parents all the time?

I do have certain friends that are around 24 years of age and their parents still pay for rent and car (or bought them cars). That's up to the parents, but it's definitely going to be hard for those people when they want to be completely financially independent. I feel like it just delays the process of "growing up". I know people that have Trust Funds and they have the luxury of floating through life, which would be nice...but 100K isn't going to last you forever. If we're talking millions in a Trust, that's a different story...

[coll214]

I try and NEVER take a loan from the parentals. My mother generally it's in the form of guilt money, she'll offer b/c she feels bad about something else. as for my father, that's blackmail money. Yeah sure I can borrow from him anytime and says I can, but then he'd own my soul for the rest of my life, no thanks. He's offered to pay for my grad school and there's no way in hell i'm doing that. Then he thinks that gives him access to every other aspect of my life as well in addition to my bank statements. I'd rather be more in debt thanks.