The general rise in prices (mortgages, shopping basket, electricity...) and the dreaded "back to school" that will cost about 400 euros per child (5% more than last year), has many households juggling their personal finance. Although inflation gave a slight respite in August, it is still above 10%.
To this must be added the rise in interest rates in July. The historical increase from 0% to 0.50% has made it difficult to access financing due to the progressive increase in consumer credit and the tightening of the requirements to request them. In a week the ECB will announce a second rise that, if forecasts come true, will be much more drastic: up to 1.25%. The measure will have direct effects on the price of loans.
As the experts at the financial comparator HelpMyCash.com explain, “we are in a cycle of great economic uncertainty that also coincides with a gradual tightening of the credit granting policies of financial institutions.
For many families with difficulties to make ends meet, requesting a loan from a friend or family member has become the way to obtain liquidity”. However, although resorting to this form of financing associates many advantages, experts also point out that it has many other drawbacks that must be assessed.
When two people have a close bond and it happens that one of the parties requests a considerable amount of money from the other, whether it is a lifelong friend, mother, father or siblings, the most normal thing is that they do not impose an interest charge. Hopefully they are cheaper than those that any financial institution would apply.
Another advantage of loans between individuals is the possibility of negotiating the conditions of repayment of the loan with more margin of permissiveness on the part of the person who lends. "If the installment payment schedule established between the parties is not met, it will be easier to agree on a possible extension of the term to pay off the debt with a family member or friend than with the bank or finance company," they exemplify from HelpMyCash.
The application process will also be less tedious. The entities may take several days to study the applicant's profile and require the delivery of documentation to ensure that they will be able to repay the debt. On the other hand, a close friend who knows the state of his finances, his employment situation and his solvency, will be able to lend the money without so much bureaucracy or waiting.
The first inconvenience is that the relationship that unites the members of the relationship may be in danger if the debtor does not comply with the agreed conditions, does not pay what he owes in the agreed time or, directly, decides not to pay the total amount of the debt. . This, in turn, can put the lender's economy at risk if he had the income of the borrowed money at the agreed time.
You can also have problems with the Treasury if the financing contract between individuals is not duly formalized. So that the collecting entity does not consider the loan as a covert donation, it is essential to record the fact in a document where the conditions are reflected, from the amount, the interest, the method of return...
The applicant must also present an official form at the corresponding Tax Agency delegation to record that another individual has lent him money. In other words: credits between friends or relatives also associate paperwork.
The Spanish loan market has a very extensive offer of loans, both from traditional banks and online finance companies supervised by the Bank of Spain. For this reason, as HelpMyCash recommends, before requesting financing from a friend or family member, it is important to assess all the alternatives to try, as far as possible, not to jeopardize a personal relationship. “Despite the rate hike, there are entities that maintain their prices and you can still find loans with very attractive conditions and requirements that can be assumed by the person who has a solvent profile and stable income. Even if in the end the applicant decides to ask a relative or friend, it is always convenient to compare”, they indicate.
For example, Bank Norwegian Loans allow you to request between 500 and 50,000 euros with interest from 5.99% TIN (6.13% APR), to be repaid within a maximum period of ten years. It does not associate the payment of commissions or any extra disbursement. Another very competitive option with the same term is the Cofidis Personal Loan, from 4.95% NIR (5.06% APR), with which you can obtain between 6,000 and 60,000 euros.
On the HelpMyCash website you can consult more than 200 loan offers from banks and finance companies to compare and assess the alternatives that exist to loans between individuals.
