Money is the medium of trade and exchange among people. Goods and services are bought with the use of money. Although this may be hard to earn, there are some cases wherein an individual lacks an amount for a needed transaction. This may result in borrowing money from a family member, friend, loan companies and banks with an agreement on the payment methods. Commonly, if a person borrows from someone he knows, a verbal arrangement is made. Most of the time, there is no rush for the person to pay back what he borrowed. Unlike loan companies and banks, there is a signed agreement to follow. Payment terms are based on the discussion. It may be monthly for a specific number of months or years.
Deciding on loaning money and making a debt for yourself requires profound reflection. You must consider alternatives and suggestions from your family and friends. If you have decided on taking a loan, you must be ready for the responsibilities and consequences.
Here are some tips on what to do when loaning money:
Determining the Amount
Borrow only the amount that you need, nothing more and nothing less. Keep the money for the expenses it is supposed to be used for. Do not be tempted to spend it on your other needs and wants. Be vigilant on your control and management of money.
Agreement
There are terms and rules to be followed when loaning money. A written or verbal contract is made together. Although verbal contracts may be executed with a witness, the more reliable agreement is through written contracts. It is valid and can be used legally. The parts of the understanding should be discussed, and the responsibilities of both parties are agreed upon. Sanctions may be reiterated if a debtor fails to pay the amount due. Legal actions are explained so that both ends may know what may happen if an agreement is unaccomplished.
Setting Expectations
Plan your payment details and method. Appropriate a schedule every month to focus only on paying your dues. If there are complications and problems ahead of the payment date, be sure to solve them before the deadline to prevent penalties. If you can pay earlier, it can further build up your character as a trustworthy debtor.
After borrowing, it is important to keep track of your payments. Record everything on a logbook. If you cannot pay on time, make sure that you have notified the person or company you borrowed money from. Be transparent and responsible. There are some cases wherein people who have tried to run away from their debt. This resulted in the moneylender taking action by looking for and hiring what we call asset tracing services. Asset tracing is recovery assistance done by professional debt enforcement teams. Their job is to find out details on the debtor and how the borrowed money was used. They can trace and reclaim it through legal methods. Best is to avoid this matter! This may lead to a bigger problem and headache. Always be accountable and mindful of what you borrowed.
