Your guide to borrowing money from friends

Family portrait looking to camera smiling together

If you need money quickly, you may be looking at borrowing from friends or a family member to help you get through financial difficulty. There are several advantages to doing so, such as being more likely to receive a more flexible repayment time scale as well as no, or minimal interest rates to pay back.

However, this is something you should take the time to carefully consider, as you do not want to end up potentially damaging a good relationship, or even ending it entirely and unnecessarily. Here are some of our top tips on the topic of borrowing money from friends and family.

Tips on lending money to friends and family

1. Know how much money you need to borrow

Before asking for an amount of money to borrow, work out exactly how much you will need and for what. Consider all of your expenses and your total income to obtain a realistic amount that you would need to tide you over that rough financial period.

Next, think about exactly how the loan will be spent. Friends and family are often more willing to lend you money if they know precisely what you are going to be using the money for.

2. Work out a budget

Before asking for a loan from friends or family members, work out a realistic plan that factors in repayments that you would be making to the said person; to ensure that you will be able to pay the loan off promptly and effectively.

You’ll need to sit down and look at all your bank statements and utility bills from the past three to six months to determine your budget and then stick to it.

3. Plan your pitch

For most people, asking family or friends for money is a difficult, nerve-wracking task, however, well you may get on with them. This means doing a little bit of planning beforehand in terms of what it is you want to say.

You should be focusing on getting across why this money is necessary to you right now, as well as a clear plan of action as to how you will pay the money back to them, to give you the best possible chance of receiving a positive response.

4. Explain the risks of the loan

Always be open and honest with your friend or family member. If there is any potential uncertainty regarding when you will be able to pay the loan in full and you know this from the outset, you should make sure you explain this to the person in question properly, openly and honestly.

5. Make a formal agreement in writing

If you’re borrowing money from a friend, a contract should be made. You may have a close relationship with this friend or family member, but you should deal with the loan in a strictly professional manner, to avoid potential problems in the future.

Consolidating the agreement in writing is an important step in achieving this. This ensures that everyone is on the same page and understands the terms of borrowing.

It may also be worth getting a lawyer or financial professional to look over the agreement to proofread and check it. Once everyone has settled on the agreement, make sure that everyone has signed it and has their own copy of the contract.

6. Keep the lender updated

If you have received a short-term loan from a friend or family member, it may be worth updating them every month to remain on good terms and also to provide reassurance. It is recommended that you keep copies of all repayments made, in the event of a dispute occurring later.

What if I can’t keep to the payment schedule?

If something has occurred that disrupts the anticipated repayment schedule you had agreed upon with a friend or family member, you should inform them as soon as you possibly can and be honest about your financial circumstances.

It may be possible to alter the repayment period or make smaller payments each month. While you should always aim to stick to the schedule, this is one of the advantages of borrowing money from friends or loved ones.

Pros and cons of borrowing from friends and family


  • You’ll usually only repay what you borrowed: a friend or family member is less likely to charge you interest, meaning in the long run, you’ll pay back less than if you were to take out a loan with an official lender.

  • More flexibility: borrowing from family or friends means that there may be room for flexibility in your agreement. For instance, if an emergency comes up that puts strain on your finances, you may be able to make smaller monthly repayments to your lender.

  • No credit checks: with no credit checks, you’ll be able to borrow money from friends and family even if you have a poor credit history.


  • Your relationship is at stake: lending and borrowing between family and friends may put unnecessary strain on relationships.

  • You won’t have a chance to boost your credit score: taking out a loan from a reputable lender, and making timely, prompt repayments can help boost your credit score in the long run!

  • The lender is at risk: If you’re lending money to friends or family, there’s always the risk of losing your money. Make sure you’re aware of how to lend money legally in the UK, as well as how to get money back from a friend, should things go wrong.

When it comes to types of borrowing, a loan from a trusted friend or family member is a feasible option for many. However, when lending money to family and friends, it’s important to set out a clear agreement and repayment schedule.

Mixing family and friends with finances can get complicated, so if you want to know how to get money back from a friend, you should ensure there is regular, clear communication between both of you. We’ve got an insightful guide on talking about money with family and friends which you might find helpful in this situation.

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