Australians like many other cultures have often turned to their closest resource when needing to borrow money without the involvement of a bank or institutional lender. A Circle lending community and market though is a fairly new concept in Australia in terms of a structured market for friend to friend and family to family loans. If you are looking to setup a loan in the family here are a few things to consider and organise first.
Formalizing Family Loans
Borrowing or lending to a family member can sometimes be a little difficult to setup as it can be process influenced by the emotions of close family members. After all how easy is it to ask a parent or a sibling for money!
Instead of just asking for a loan from your relatives and having to ask the difficult question, Lending Hubworks by ‘formalising a family loan’ model. As a borrower you create a loan listing on Lending Hub and go through a quick application. At the end of the application you have effectievly created a formal request for a loan with a set repayment schedule, dfined interest rate and amount and you have stated the purpose and use for the personal loan.
Generating Interest in your Loan
The next step is to promote your loan listing to you family members (or close friends if you want to as well) by emailing them details of your loan listing on Lending Hub. Your family members can then view your commitment to the loan by viewing a loan listing similar to the ones at Lending Hub Sample Loan Listings.
Making it Easy for Your Family to Lend to You
Make it easy for your family to make the decision to lend to you by following a few simple points:
State what you want to use the personal loan for and include some detail e.g. Loan for an Education Course
Keep the amount you are asking for as small as possible by doing a quick budget of what you actually need
Provide a little info about yourself…you’ll be surprised how often even people who know you forgot the specifics of your background!
Set a reasonable limit on the interest rate, even if are prepared to pay a rate similar to a bank it will help show you are serious
Be active in promoting your loan and need for a loan…persistance pays off
So instead of making vague promises and using the back of a napkin to borrow money from your parents or other family members, take an active step in formalising your loan.
