Borrowing money from friends is generally frowned upon because of the potential harm it can cause a friendship. But sometimes you may feel no other option exists. According to a 2012 survey from The National Foundation for Credit Counseling, 27 percent of adults in the U.S. would go to their friends or family if they needed help with money. If you’re going to ask your friend to borrow money, do it the right way.
1. Last Resort
Acknowledge the problems that lending and borrowing money between friends can cause a friendship. Reassure your friend that you wouldn’t go to her unless you knew she had the means to help and you knew she would at least consider it, suggests author Erik Kolbell in "Lifescripts for Family and Friends: What to Say in 101 of Life’s Most Troubling and Uncomfortable Situations." Explain that this is the last resort and you’ve exhausted every other option of borrowing the money and that your family or other friends were not in a position to help.
2. Explain Why
Give your friend an adequate and thorough reason why you need the money. Make a deal that will benefit him in some way. Kolbell gives the example of explaining that borrowing from your friend would be quicker than going to a bank. Offer to pay interest at a higher rate than what he receives from his savings account -- but it could still be less than the interest you would have to pay if you loaned from an institution.
3. Come Up With Terms
Although you are borrowing from a friend, treat it as a business deal. Show your friend that you are serious about paying her back by presenting her with a repayment plan that will not only benefit you, but her as well. Tell her exactly how you plan to pay her back. Present her with ideas for terms that you can agree upon: when you will pay her back, how you will pay her back and what you would do if you do not meet the agreements. Show her that you’ve done your research and have looked up the different interest rates and terms that banks offer.
4. Stay Calm and Professional
When approaching your friend for money, do not appear panicked or desperate. Approach him in a professional manner, even though you are asking for a personal favor. Don’t pressure him. Avoid asking during a stressful time; bring up the topic when you are both in good moods and in a relaxing environment. After you have asked your friend, give him time and space to consider the request. Offer him a specific amount of time -- like one week -- to think about it and let him know that you’re open to any of his questions and open to any changes he wants to make on the terms you presented.
- Lifescripts For Family and Friends: What to Say in 101 of Life’s Most Troubling and Uncomfortable Situations; Erik Kolbell
- The Money Nerve: Navigating the Emotions of Money; Robert Wm Wheeler
- National Foundation for Credit Counseling: The 2012 Consumer Financial Literacy Survey
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