essay about borrowing money

25 Sample Letters for Borrowing Money from a Friend

Friendship, as we know, is about more than just sharing good times together. It often involves providing emotional, and at times, financial support during periods of hardship.

While asking a friend for financial help can be tough, there’s no shame in it. It’s all about approaching the matter respectfully, honestly, and with consideration. Here are 25 sample letters to guide you in such a situation.

25 Sample Letters: Borrowing Money from a Friend

Sample 1 – The Straightforward Ask

Dear [Friend’s Name],

I hope this letter finds you well. I am writing to ask for your financial assistance. I have come across some unexpected expenses and need to borrow $500. I plan to pay you back by the end of next month. Thank you for considering my request.

Best, [Your Name]

Sample 2 – The Sensitive Approach

I trust this letter finds you in good spirits. I am facing a financial challenge and was hoping you could help. I need to borrow $300, and I promise to repay you within the next two months. Please let me know if this is feasible for you.

Kind regards, [Your Name]

Sample 3 – The Grateful Approach

I hope you are doing well. I’m reaching out because I am in a bit of a bind financially. I need to borrow $1000, and I am happy to discuss a comfortable repayment plan with you. Your help would mean the world to me.

Thank you, [Your Name]

Sample 4 – The Humble Request

I hope this letter finds you well. I am currently facing some financial difficulties and need to borrow $200. I understand if you are unable to assist, but if you can, it would be greatly appreciated.

Yours, [Your Name]

Sample 5 – The Respectful Plea

I trust you are well. I am going through a difficult time financially, and I was wondering if you could lend me $700. I intend to repay you within three months. Please let me know your thoughts.

Warm regards, [Your Name]

Sample 6 – The Apologetic Approach

I hope you are in good health. I feel uneasy having to write this letter, but I am in a financial pickle and need to borrow $600. I will strive to repay you within six weeks. I appreciate your understanding.

Sample 7 – The Comforting Promise

I trust this letter finds you in good spirits. I am writing to ask if I could borrow $1500. I understand if you can’t, but if you can, I guarantee to pay you back within four months. Please take your time to consider.

Sincerely, [Your Name]

Sample 8 – The Understanding Appeal

I hope you are well. I find myself in a tough financial situation and need to borrow $900. I completely understand if you are unable to assist, but if you can, it would mean a lot to me.

Sample 9 – The Emotional Request

I trust you are doing well. I am currently going through a tough phase and need to borrow $1200. I would appreciate it if you could help, but I understand if you can’t.

Sample 10 – The Hopeful Approach

I hope this letter finds you well. I’m writing with a bit of a heavy heart as I am facing some financial hurdles. I need to borrow $800 and was hoping you could help. I promise to repay within a reasonable timeframe.

Sample 11 – The Careful Request

I hope you’re keeping well. I’m currently in a bit of a tight spot financially, and I need to borrow $450. I understand if this is not possible for you right now, but if it is, I’d be extremely grateful.

Sample 12 – The Kind Plea

I trust you are in good health. I’m writing this letter with a heavy heart to ask for your financial assistance. I need to borrow $350. I understand this is not a small amount and will endeavour to repay it as soon as I can.

Best wishes, [Your Name]

Sample 13 – The Gracious Ask

I hope this message finds you well. I am currently experiencing a financial shortfall and need to borrow $750. I understand if this isn’t feasible for you, but if you can help, I would greatly appreciate it.

Kindly, [Your Name]

Sample 14 – The Reassuring Request

I trust everything is well with you. I’m going through a rough patch and need to borrow $550. I assure you I would not ask if it were not urgent and will repay you as quickly as possible.

Yours truly, [Your Name]

Sample 15 – The Straightforward Plea

I hope this letter finds you in good health and spirits. I am currently in a tough financial situation and need to borrow $650. I understand if this is not possible, but if you can help, I promise to repay you within a few months.

Sample 16 – The Polite Appeal

I trust this finds you well. I am facing a financial crisis and need to borrow $950. I understand if this is not convenient for you, but if you can help, I would be forever grateful.

Sample 17 – The Sincere Request

I hope you’re doing well. I’m currently facing some unexpected expenses and need to borrow $300. I understand if this is not possible, but if you’re able to help, I would be immensely thankful.

Yours sincerely, [Your Name]

Sample 18 – The Honest Appeal

I trust you are well. I am writing to ask for your help in a difficult financial situation. I need to borrow $850. I understand if this isn’t feasible for you, but if you can assist, it would mean the world to me.

Sample 19 – The Considerate Ask

I hope this letter finds you well. I am currently going through a tough financial time and need to borrow $400. I understand if this is not convenient for you, but if you can, I promise to repay you in the shortest possible time.

Sample 20 – The Courteous Plea

I trust you’re keeping well. I’m writing to ask if I could borrow $1,200. I understand if you’re unable to assist, but if you can, I assure you that I will repay it within a few months.

Sample 21 – The Earnest Request

I hope you are doing well. I find myself in a financial bind and need to borrow $200. I understand if you can’t assist me, but if you can, it would be deeply appreciated.

Best regards, [Your Name]

Sample 22 – The Tactful Appeal

I trust this finds you in good spirits. I am currently facing some financial struggles and was hoping to borrow $1,000. I understand if this isn’t feasible for you, but if you can help, I promise to pay you back as soon as I can.

Sample 23 – The Cautious Ask

I hope this letter finds you well. I am currently going through a tough financial phase and need to borrow $650. I understand if you can’t assist, but if you can, it would be deeply appreciated.

Sample 24 – The Modest Plea

I trust you are well. I’m writing this letter to ask if I could borrow $900. I understand if this is not possible, but if you can assist, I assure you I will repay it within the agreed time frame.

Sample 25 – The Appreciative Appeal

I hope this message finds you well. I’m in a bit of a financial crunch and need to borrow $500. I understand if this isn’t feasible for you, but if you can help, I will be forever grateful and promise to repay you as soon as possible.

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Needing to borrow money? Four tips on what’s okay and what’s not

Assistant Professor in Finance and Financial Planning, University of Canberra

Disclosure statement

Bomikazi Zeka does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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It’s a financially challenging time for most households. With interest rates rising, many are spending even more money on debt repayments or taking out loans to help make ends meet.

A report released recently in South Africa, compiled by one of the country’s biggest banks, found that 42% of South Africans , across various income levels, cannot manage their debt. This indebtedness has caused 67% of the respondents to worry about their debt to the point that it negatively affects their mental health.

As a new year gets underway, it’s a good time to reflect on your financial portfolio.

My research as a finance and financial planning academic seeks to understand the pathways that lead to economic empowerment and improve financial security, including the role of debt and other financial products.

There may be instances where the use of a credit card might be absolutely necessary (for example if you are making travel bookings). But for the most part if you are borrowing to pay regular expenses, increasing your credit limit, or using a credit card (or borrowing money from family) to pay off existing debt, then it may be worthwhile to consider these four tips on borrowing money.

Firstly , it’s good to know what amount of debt is okay to hold.

There is no easy answer to this because everyone’s financial situation is unique – and this will determine how much debt each person should draw on. Making this assessment requires knowing your ability to service debt. In other words, the amount of debt you take on should be guided by your ability to comfortably repay it.

The debt service ratio is a useful tool to determine this. It’s calculated by dividing your monthly debt by your monthly income. Say for example your monthly debt repayment is R6,000 and you earn a monthly salary of R30,000. You’d have a debt service ratio of 20%. As a general rule of thumb, a debt service ratio of 25% or less is considered acceptable.

Calculating this ratio will help you set a limit for how much income you are prepared to commit to your debt repayments.

Secondly , be picky about who you borrow money from.

Financial institutions, such as banks or other formal money lenders, are the most popular sources for borrowing because the terms of borrowing, fees and interest rates can be determined in advance. More than that, borrowing from a regulated and recognised financial institution helps build a credit score, and, as counter-intuitive as it may seem, you need debt to take out debt. If you need to take out a more substantial loan in future, such as a mortgage or vehicle financing, then having a loan from a regulated financial institution helps to determine your credit score. Your payment history, account information, amounts owed and how long the account has been active are on record. This can give a good indication of your ability to service a future debt commitment.

Thirdly , there are sources of borrowing you should avoid.

There are many ways and places to borrow money from – but not all of them are advisable.

It is common (and sometimes culturally accepted) to borrow from friends or family. But almost everyone who has gone down the route of borrowing from loved ones knows that it has the potential to ruin relationships when the terms of the repayment have not been honoured. Friends and family may not charge interest and tend to be more flexible than formal financial institutions. But borrowing from those close to you can cause a significant strain on a relationship – and even end it.

Then there are the loan sharks who charge exorbitant interest rates on their loans and get away with it because they are unregistered and unregulated. They also prey on the vulnerability of consumers who need a loan and resort to unscrupulous tactics when the loans aren’t repaid on time. Being in debt is stressful enough and borrowing from an informal moneylender can only do more harm than good.

Fourthly , be scrupulous about what you’re borrowing money for.

Debt can be used to buy almost anything, from a cup of coffee to big ticket items such as a car or a house. However, anything that does not have a significant monetary value or is consumption-driven – clothing accounts, entertainment, or appliances – should not be financed through debt. That’s because the interest or fees of the credit used to buy consumable goods is often greater than the value of the consumable itself.

When you buy anything through debt, it’s worthwhile to ask yourself whether the purchase is worth the interest that is attached to it, and the future income you will need to commit to repaying the debt.

Knowing how much debt you should have, where to acquire it and what to use it for can make a huge difference to your financial wellbeing. Even though it has its uses, debt can quickly become a slippery slope when it’s not properly and consistently managed. If you are unsure about how to use debt, it’s always better to seek the help of a professional financial adviser.

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Advantages & Disadvantages of Borrowing Money from the Bank

Can I Get a Car Loan If I Am Unemployed?

People borrow money from the bank for a variety of reasons. Homes, cars, major appliances, renovations, education and business start-ups are some of the common reasons. Before taking out a bank loan, you need to weigh the pros and cons of doing so relative to other financing options.

Meet Short-term Financial Needs

By borrowing from a bank, you have a way to fund near-term financial purchases or to achieve short-term goals. If college fits well in your life plans but you don't have the savings, a bank loan can help you get started. Similarly, small business start-ups are often funded either by bank loans or equity investment. With a bank loan, you get the needed funds with no obligation to share future earnings with investors.

Low Rate Potential

Depending on the nature of the loan, you can often find low-interest-rate financing, which makes bank borrowing a wiser choice than racking up the balance on a high-rate credit card, for example. Home and auto loans, for instance, typically have low rates because you secure the loans with the property you purchase. Fixed-rate home loans below 4.5 percent are relatively common for home buyers as of early 2019. You may even get a personal loan below 10 percent without offering up collateral if you have excellent credit.

Cash Flow Restrictions

The tradeoff for getting the funds you want or need now is the need to allocate future income to pay off the debt. If you have a monthly loan payment of $200 over a 10-year payment period, you effectively eliminate $200 of cash flow during that repayment period.

Exposure Risks

Borrowing from the bank presents two significant personal and financial risks. One is the risk of property repossession if you don't pay back a loan secured by your home or car. Losing your home to the bank is a major financial burden. Even if you don't secure a loan, you risk damaging your credit rating by making late payments or defaulting on personal loans. This impedes your future borrowing potential and the chances of getting favorable rates.

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Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

Why Borrowing Money From Friends Can Backfire

Research shows how borrowed money can be accompanied by judgment..

Posted March 12, 2024 | Reviewed by Michelle Quirk

• Friends may get angry if they deem the borrower's spending to be frivolous or unnecessary.
• A new study shows that judgment of the debtor's spending persisted even after they had repaid the loan.
• Anger and the perceived right to oversight don’t mix well with a healthy friendship.

Many of us know the painful feeling: An unexpected expense comes up, and we don’t have the cash the pay for it. In fact, due to inflation and the increased costs of living, almost half of Americans can’t come up with $1,000 on short notice (Horvarth, 2024). That can mean having to delay a necessary medical procedure or urgent repair of a car or washing machine. But the feeling can be just as painful if the expense is purely for pleasure—for example, not being able to afford a trip to a wedding or a concert.

What to do? Credit card overdrafts can be prohibitively expensive, and many people already face debt from student loans or mortgages, such that adding additional debt to their balance seems risky. This is when many of us might turn to friends to borrow the money. This solution sounds advantageous at first. Friends typically don’t charge interest, and chances are that friends help each other out in enough ways over time that a one-time loan doesn’t upset the friendship .

However, recent research by Ashley Angelu and colleagues (2024) suggests that there are pitfalls when borrowing money from friends. Specifically, the friend might feel entitled to judge what the debtor spends the borrowed money on and might get angry if they deem the spending frivolous or unnecessary. In one of their studies, 460 participants from an online panel imagined that they had given a friend $60 as a gift, a loan, or a payment for work. The friend then spent the money either on a textbook or on a video game. When the money was a gift or a payment, people didn’t judge the friend regardless of whether the money was used for a necessary textbook or a pleasurable game. Yet if the money came from a loan, people were angrier at their friend for spending the cash for the game than for the book. Further studies showed that this judgment came from lenders’ feeling that they deserved oversight over the borrowed money. As a lender, people felt they should have some control over how the debtor spends the borrowed money.

If this is not enough of a cautionary tale, the authors discovered another interesting pattern. The judgment persisted even after the debtor had repaid the loan. In other words, even when people have been paid back the $60 they lent and then learned that the debtor spent their money on something deemed frivolous, they were angrier than if the debtor bought something that was necessary. The perceived right to oversight persisted even after the loan transaction was over and done. Borrowers on the other hand felt that lenders deserved much less oversight over the money.

This discrepancy between lenders and borrowers should be a warning because anger and the perceived right to oversight don’t mix well with a healthy friendship. But what if we really can’t come up with cash and a friend offers a loan? Being aware of their potential desire for some oversight can help, and also explaining to them why the purchase is necessary. Even if something at first appears frivolous, they might feel better if they learn how much the pleasurable expense means to the borrower. Or, even if it’s difficult, building up a rainy day fund so that no debt is needed might be easier after all than borrowing from and then dealing with an angry friend.

Angulo, A. N., Goldstein, N. J., & Norton, M. I. (2024). Friendship fallout and bailout backlash: The psychology of borrowing and lending. Journal of Consumer Psychology.

Horvarth, H. (2024). Inflation washes away rainy day funds: 44% of Americans can’t cover a $1,000 expense. New York Post, January 30.

Janina Steinmetz, Ph.D., is an Associate Professor of Marketing at Bayes Business School in London, UK. Her research investigates consumer motivation and self-control in a social context.

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Advantages and Disadvantages of Borrowing

Looking for advantages and disadvantages of Borrowing?

We have collected some solid points that will help you understand the pros and cons of Borrowing in detail.

But first, let’s understand the topic:

What is Borrowing?

What are the advantages and disadvantages of borrowing.

The following are the advantages and disadvantages of Borrowing:

Advantages of Borrowing

Disadvantages of borrowing.

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Updated on October 06, 2023

10 Best Ways To Borrow Money with Pros & Cons (+ expert tips)

In this article, we’ll explore the 10 best ways to borrow money. 

We’ll break down what you need to know about each option, including the pros & cons, as well as who each option is best for (and who should avoid it).

Key Takeaways About The Best Ways To Borrow Money There are many great ways to borrow money fast - no banker required! Options to borrow money fast include personal loans, credit cards, and peer-to-peer lending. While many of the best ways to borrow money require a good credit score, you'll be surprised at some of the clever ways you can borrow money even with bad credit, such as by using online lenders or borrowing from a family member. Before you take out a loan, make sure you find out the interest rates and terms you're being offered and how fast the cash will hit your bank account. You can even leverage your 401(k) retirement account to get cash fast, but there’s a catch.

The 10 Best Ways To Borrow Money

1. personal loan from a bank.

A bank is a financial institution that serves customers and businesses by receiving deposits, offering checking, savings, and investment accounts, and making loans. Types of loans banks offer include mortgages, auto loans, credit cards, and personal loans.

Pros of Personal Bank Loans

• Competitive rates and terms on loan products
• Fixed monthly payment and repayment schedule
• Having a relationship with a bank can make it easier to apply

Cons of Personal Bank Loans

• Origination fees and application fees can apply
• Good credit required for the best rates and terms

How Does Getting a Loan from a Bank Work?

Banks typically have established loan application procedures, either online or in-person, which require providing necessary documentation such as identification, proof of income, and credit history. It is advisable to check the specific loan requirements of the bank beforehand to ensure a smooth application process.

Personal loans from banks are best-suited for individuals with  good-to-excellent credit scores and low  debt-to-income ratios . 

If you’re interested in getting a personal loan from a bank, start with your current bank and see if you meet the requirements. Sometimes, banks are more lenient with existing customers as opposed to new customers, so it’s always best to start with your current bank when looking for a personal loan.

2. Personal Loan From a Credit Union

The main difference between a credit union and a bank is that credit unions are typically not-for-profit institutions whereas banks are for-profit.

Getting a personal loan from a credit union follows a similar process to that of a bank loan. Credit unions often have lower interest rates and more personalized services compared to traditional lenders, which can save you money in the long run.

Pros Of Personal Loans From Credit Unions

• Credit unions may charge fewer fees and have better rates than banks
• Could be easier to get approved if you're already a credit union member

Cons Of Personal Loans From Credit Unions

• Some credit unions require membership fees
• Affiliations required for credit union membership

How Does Getting a Loan from a Credit Union Work?

Once you've selected a credit union of your choice, you'll need to gather the necessary documentation for the loan application. This typically includes identification documents, proof of income, and details about your employment history. The credit union will evaluate your financial situation and creditworthiness to determine the loan amount and interest rate you qualify for.

Credit unions can sometimes offer better rates than banks because they’re not-for-profit institutions. If you currently bank at a credit union, reach out to them and see what they have to offer when it comes to personal loans.

3. Borrow Money From Online Lenders

Online lenders operate solely online, allowing you to complete the entire loan process from the comfort of your own home.

Pros of Borrowing Money From Online Lenders

• Online loans are convenient
• Funding as soon as the next business day
• Online lenders have competitive rates and terms

Cons of Online Lending

• High interest rates and loan fees for bad credit
• Impersonal loan experience

How Does Getting a Personal Loan from an Online Lender Work?

To apply for a personal loan from an online lender, you'll need to complete an online application form. This will require you to provide personal and financial information, such as your name, address, income, and employment details. Some lenders may also request documentation to support your application, such as bank statements or pay stubs.

One of the advantages of online lenders is the speed at which they can process loan applications. Unlike traditional banks or credit unions, online lenders often provide quick pre-approval decisions, sometimes within minutes. This makes them a great option if you're in need of immediate funds for unexpected expenses.

Online lenders also typically have less stringent qualification requirements, accepting credit scores as low as 550. Keep in mind, though, that if your credit score is low, you won’t qualify for the best interest rates.

Browse the top online lenders for personal loans >>

4. Peer-to-Peer Lenders

Peer-to-peer loans, also known as P2P loans, are a type of borrowing that connects individual borrowers directly with investors or lenders through an online platform. This innovative lending model cuts out the traditional intermediaries, such as banks, allowing borrowers to access funds at potentially lower interest rates and investors to earn higher returns.

Pros of Borrowing Money from a Peer-to-Peer Lender

• Borrow what you need when you need it
• Easy online loan application
• Easier credit requirements than some other loans

Cons of Borrowing Money from a Peer-to-Peer Lender

• Watch out for loan origination fees, which can add up to 5% to your loan amount
• High interest rates for bad credit

Best peer-to-peer lenders in 2023 >>

How Do Peer-to-Peer Loans Work?

To obtain a P2P loan, borrowers need to go through a simple application process. They provide personal and financial information, similar to the process with traditional lenders. 

Once approved, the loan is listed on the P2P platform for potential investors to browse. Investors can choose to fund the entire loan amount or contribute a portion of it, diversifying their investments across different borrowers. As more investors commit to funding the loan, the borrower's requested funds are accumulated.

Interest rates on peer-to-peer loans range from 7-36%, with a minimum credit score of 600 preferred, according to  debt.org .

After the loan is fully funded, the borrower receives the funds in their bank account. Repayment terms are established and managed through the P2P platform. Borrowers make regular payments, including principal and interest, and the platform distributes the payments to the investors.

5. Home Equity Loans

A home equity loan is a type of loan that allows homeowners to borrow money against the equity they have built up in their property. Equity is the difference between the current market value of the home and the outstanding mortgage balance.

Pros of Home Equity Loans

• Qualify for competitive rates and loan terms
• Get a fixed interest rate and set repayment plan

Cons of Home Equity Loans

• Lose your home if you loan goes into default
• Reduce the amount of home equity you have
• Funding can take several weeks

How Does Getting a Home Equity Loan Work?

To get a home equity loan, homeowners typically need to have a significant amount of equity in their property. Lenders usually require borrowers to have at least 15-20% equity before they can qualify for a home equity loan.

The application process for a home equity loan is similar to that of a traditional mortgage. Borrowers need to provide personal and financial information, including income, employment history, and  credit score . Lenders also consider other factors such as the loan-to-value ratio, which compares the loan amount to the appraised value of the property.

Home equity loans typically have a lower interest rate than personal loans and other types of borrowing. If you have equity in your home, this can be a great option to get money quickly.

6. 401(k) Loans

A 401(k) plan is a retirement plan offered by most employers that allow employees to contribute a percentage of their paycheck toward their plan. 401(k) retirement plans not only help employees save for and invest in their future, but they also come with significant tax benefits.

Getting a 401(k) loan allows individuals to borrow money from their retirement savings plan. 

To get a 401(k) loan, first individuals need to check if their employer's 401(k) plan permits loans. If it does, they can typically borrow up to a specific percentage of their vested account balance or a set dollar amount.

Pros of Borrowing Against Your 401(k)

• 401(k) loans are no credit check loans
• Pay interest back to yourself
• Borrow from assets you already have

Cons of Borrowing Against Your 401(k)

• Risks of having to pay back funds immediately if you lose your job
• Money borrowed from your 401(k) is not growing for retirement until you pay it back
• You'll pay taxes and penalties on the distribution if you don't pay your loan back
• Can take several weeks to get loan funds

How Does Getting a 401(k) Loan Work?

To apply for a 401(k) loan, individuals need to fill out a loan request form provided by their plan administrator. The form will require information such as the loan amount requested and the desired repayment term. Generally, loan repayment terms range from 1 to 5 years, although some plans may allow longer terms for loans used to purchase a primary residence.

One advantage of a 401(k) loan is that there is  no credit check involved . Approval for the loan is based solely on the available balance in the individual's 401(k) account. Additionally, interest rates for 401(k) loans are usually lower compared to other borrowing options.

Repayment for 401(k) loans is typically done through payroll deductions, making it convenient for borrowers. However, it's crucial to note that if the individual leaves their current job, the loan may become due in full, and failure to repay could result in taxes and penalties.

7. Credit Card Loans

A credit card loan allows individuals to borrow money from their credit card issuer. The loan amount is typically based on the individual's approved credit limit.

Pros Of Credit Card Loans

• Credit cards let you get funding quickly, sometimes with 0% APR
• Use your card for bills or take out a cash advance
• Some cards offer rewards for spending

Cons Of Credit Card Loans

• Interest rates are high
• Cash advance fees can apply
• Getting cash at an ATM means losing your grace period

How Does Getting a Credit Card Loan Work?

To obtain a credit card loan, individuals can either request a cash advance or apply for a balance transfer.

A cash advance involves withdrawing cash from an ATM or using the card at a bank. The amount borrowed is added to the credit card balance and is subject to interest charges and fees.

A balance transfer involves moving existing credit card debt to a new card with a lower interest rate. This allows individuals to consolidate debt and potentially save on interest charges.

Credit card loans generally have higher interest rates, averaging 24%. Because of these higher rates, it's important to carefully consider the cost of borrowing and explore alternatives if needed. 

8. Margin Account

A margin account is a special type of bank account that allows people to borrow money from the bank to buy things like stocks or investments. 

It's similar to borrowing money from a friend to buy a rare baseball card you expect to increase in value and promising to pay them back later.

Pros of Margin Accounts

• Potential for gains if your investment value goes up
• Better interest rates than other borrowing methods

Cons of Margin Accounts

• Considerable risk of losing money
• Collateral requirements apply
• You can only use this funding to purchase securities

How Do Margin Accounts Work?

Let's say you want to buy some stocks, but you don't have enough money to pay for them by yourself. 

You can open a margin account with a bank or a brokerage firm. They will lend you the money to help you buy the stocks.

But remember, when you borrow money from the bank, you have to pay it back eventually. 

In a margin account, you have to follow some rules. 

One important rule is that you have to keep a certain amount of money in your account at all times. This is called the "margin requirement." It's like a minimum balance you have to maintain.

If the value of your stocks goes up, you might make some money. 

But if the value goes down, you might lose money. 

If your account value falls below the margin requirement, the bank might ask you to put more money in your account to make up for the loss. This is called a "margin call."

Margin accounts can be helpful if you want to buy more stocks than you can afford with your own money. 

But they also come with some risks. It's important to be careful and understand how they work before using them. 

It's a good idea to talk to a financial advisor if you have more questions about margin accounts .

9. Buy Now, Pay Later Options

Buy Now, Pay Later options allows consumers to make a purchase upfront and defer the payment for a later date.

When shopping online or at a participating retail store, customers have the option to choose a Buy Now, Pay Later option at checkout. They can then split the cost of their purchase into more manageable installments, often interest-free.

Pros of Buy Now, Pay Later Options

• Get funding for items you need right now
• Pay off your purchases with regular payments

Cons of Buy Now, Pay Later Options

• You can use BNPL to make a purchase but not borrow cash
• Potential for high interest rates and fees

How Does Buy Now, Pay Later Work?

Buy Now, Pay Later options usually run for a certain period, typically ranging from a few weeks to several months. 

Depending on the provider, there may be specific terms and conditions, such as late fees or interest charges beyond a certain point. But as long as the payments are made on time and in full, customers can avoid any additional costs.

Buy Now, Pay Later can be especially useful for unexpected expenses or when extra time is needed to pay off purchases. 

10. Payday Loans

Payday loans are short-term loans that are typically due on the borrower's next payday. Payday loans are one of the quickest ways to access cash – typically taking one business day to get funded. 

However, they are one of the most expensive types of loans and can end up putting the borrower in a dangerous cycle of using a payday loan prior to each paycheck. 

Because of this, we recommend avoiding payday loans unless absolutely necessary.

Pros of Payday Loans

• Easily accessible, and the application process is quick and simple
• Borrowers with poor credit can still qualify for a payday loan
• Funds are disbursed quickly, providing immediate financial relief

Cons of Payday Loans

• Significantly higher interest rates compared to other types of loans
• The repayment period is short, typically two to four weeks
• Those who are unable to repay the loan on time may fall into a debt cycle, accumulating additional fees and interest

How Does Getting a Payday Loan Work?

Borrowers can apply for a payday loan either online or in person at a payday lending store. The application process is usually quick and simple.

Payday lenders typically do not perform a thorough credit check, making it easier for individuals with poor credit to qualify for a loan. Approval is usually based on the borrower's income and ability to repay.

The loan is typically due on the borrower's next payday, usually within a few weeks. The borrower writes a post-dated check to the lender for the loan amount plus any fees. If the borrower is unable to repay the loan in full, they may have the option to extend it.

Tips on Borrowing Money

1. Evaluate your financial situation:  Before taking out a loan, assess your current financial position. Determine your income, expenses, and existing debt. This will help you understand how much money you can realistically borrow and afford to repay.

2. Research loan options: Explore different types of loans available to you, such as personal loans, credit union loans, or online lenders. Compare interest rates, loan terms, and eligibility requirements to find the best option that suits your needs.

3. Improve your credit score:  A higher credit score can help you secure better loan terms and lower interest rates. Pay your bills on time, reduce debt, and check your credit report for any errors or discrepancies that need to be addressed.

4. Consider the total cost of borrowing: Look beyond the interest rate and consider other fees and charges associated with the loan. Read the fine print and understand the repayment terms, late payment penalties, and any origination fees.

5. Borrow only what you need:  Avoid borrowing more money than necessary. Borrowing a larger amount may be tempting, but it can increase your debt burden and make it harder to repay.

6. Have a repayment plan in place:  Before borrowing, create a budget that includes the loan payments. Ensure you can comfortably make the monthly payments without straining your finances. Having a clear repayment plan will help you stay on track and avoid falling into a debt cycle.

There are many ways to borrow money quickly, including personal loans from banks, credit unions, and online lenders, peer-to-peer lending, credit card loans, margin accounts, and payday loans.

Borrowing money can be a helpful tool in managing your financial needs, but it's essential to approach it with caution and consideration. Before taking out a loan, evaluate your financial situation and determine how much you can realistically afford to borrow and repay. Research different loan options, comparing interest rates, terms, and requirements to find the best fit for your needs.

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About the Author

Written by: Sarah Brooks

Sarah Brooks is a personal finance writer and editor with more than 10 years of experience. She specializes in personal and business loans, mortgages, auto loans, and credit cards.

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Students Loans: Advantages and Disadvantages Essay

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Loan is money or property that a person borrows from a financial institution and repays it at a later date. It has interest which is compounded on an agreed period of time. Student loans are similar to this. It is the money borrowed by students to finance their education and pay bills while studying. This is repaid either upon completing studies or at an interval enshrined in the loan’s terms and conditions.

There are advantages and disadvantages of students’ loan. One is that it enables the student to settle the bills and pay school fees. The other is that it finances student’s education which is a future investment. Gaining knowledge inclines the student to good job and pay in the future. Some students come from humble background and therefore financial aid comes in handy. Since students have fewer responsibilities as compared to old adults, a loan is ideal because they are unable to fend for themselves.

There are also shortcomings of students’ loan. One is that the students get more indebted to the extent that their studies are interrupted. With high interest rates, the amount to repay is huge. This becomes more difficult especially when the loan is paid in short installments. Loans with longer installment periods have high interest rates. The other problem associated with student loan is that young adults end up delaying marriages or family formation because they want to avoid financial responsibility. This happens since much attention is turned to clearance of debts. A huge debt limits the life of a student. This is because other forms of loan cannot be secured easily elsewhere before student’s loan is settled. It is easy for financial institution to trace students’ loan repayment details.

However, students have several strategies at their disposal to repay loan and live without debts. Some students have resorted to looking for part time jobs. This makes it easier to settle the bills and pay school fees. It also saves the student the need to incur debts due to borrowing. Another strategy is cutting down expenditures. When a student lives within his or her means, unnecessary debts are dispensed. Students can also form marriages at a later period to ensure that they settle their debts first.

The amount of loans taken by students is reported to have decreased nowadays. Many students are resorting to alternative means of obtaining money such as part time jobs. Lending terms and conditions have also become tighter and so students are shunning away from borrowing. This is healthy for the students but it has negative implication on the country’s economy. When students borrow less money purchasing power declines. Low purchasing power leads to less consumption as less purchase is made. When country’s consumption declines the economics growth follows suit. This is because economic growth is a function of consumption.

Therefore, a student planning to pursue a bachelor major in a costly university like Kent State University should consider the points for and against loan as I have outlined above. The ideal step is to be aware of the huge impending debt and getting ready to look for alternative sources of money. This includes a part time job and cutting down one’s expenditure. The debt to be incurred should be within the amount earned from the job or any other periodical source of money. The decision should also factor in the amount of income one anticipates to earn in future.

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Bibliography

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The Pros and Cons of Getting a Loan from a Money Lender

1. considering a loan from a money lender here are the pros and cons to, 2. weighing the pros and cons of taking out a loan from a money lender, 3. the positives of securing a loan from a money lender, 4. the negatives of borrowing from a money lender, 5. assessing the pros and cons of using a money lender for your next loan, 6. considering using a moneylender here are some things to think about first, 7. should you get a loan from a moneylender pros and cons to help you, 8. what are the benefits and drawbacks of taking out a loan from a moneylender, 9. weighing up the pros and cons of getting financial help from a moneylender.

When you're in need of money, you might be considering a loan from a money lender . Here are some pros and cons to help you make a decision .

1. Money lenders offer fast cash. If you need money quickly, a money lender may be your best option.

2. You can often get a lower interest rate from a money lender than you would from a traditional bank.

3. Money lenders are often more flexible than banks when it comes to repayment terms.

4. You may be able to get a larger loan from a money lender than you could from a bank.

5. Money lenders are typically more willing to work with people with bad credit than banks are.

1. Money lenders often charge higher interest rates than banks.

2. You may be required to provide collateral, such as your home or car, to get a loan from a money lender.

3. Money lenders may use aggressive tactics to collect loans, such as threatening legal action or garnishing your wages.

4. You may be required to pay fees, such as origination fees or application fees, to get a loan from a money lender.

5. You may be at risk of becoming trapped in a cycle of debt if you take out a loan from a money lender.

Considering a loan from a money lender Here are the pros and cons to - The Pros and Cons of Getting a Loan from a Money Lender

In life, there are always going to be pros and cons to everything we do. This is especially true when it comes to making financial decisions , like taking out a loan from a money lender.

On the one hand, a loan can give you the financial boost you need to make a large purchase or invest in a new business venture. On the other hand, loans can be difficult to repay if you don't have a solid plan in place.

Before you make the decision to take out a loan, its important to weigh the pros and cons carefully. Here are a few things to consider:

Pros of Taking Out a Loan

1. You Can Get the Money You Need Quickly

If you need money for an emergency situation or a last-minute purchase, a loan can be a lifesaver. Money lenders can approve and fund your loan much faster than traditional banks. In some cases, you can get your money in as little as 24 hours.

2. You Don't Need Perfect Credit to Qualify

Another great thing about loans from money lenders is that you don't need perfect credit to qualify. If you have bad credit or no credit history at all, you can still get a loan from a money lender.

3. You Can Use the Money for Anything

When you take out a loan from a bank, there are usually restrictions on how you can use the funds. With a loan from a money lender, you can use the money for anything you want. Whether you need it for a new car, a down payment on a house, or to start your own business, the choice is up to you.

cons of Taking Out a loan

1. Loans Can Be Difficult to Repay

One of the biggest disadvantages of taking out a loan is that they can be difficult to repay. If you don't have a solid plan in place for how you're going to repay the loan, you could find yourself in financial trouble down the road.

2. You May Be Charged high Interest Rates and fees

Another downside of loans is that they often come with high interest rates and fees . This can make it even more difficult to repay your loan and can end up costing you more in the long run.

3. You Could Lose Your Collateral if You Cant Repay the Loan

If you take out a secured loan, you may be required to put up collateral, like your home or your car. If you cant repay the loan, you could lose your collateral, which could put you in even more financial trouble.

Before taking out a loan, carefully consider the pros and cons. Make sure you have a solid plan in place for how you're going to repay the loan so that you don't find yourself in financial difficulty down the road.

Weighing the pros and cons of taking out a loan from a money lender - The Pros and Cons of Getting a Loan from a Money Lender

There are a number of reasons why people might choose to take out a loan from a moneylender, rather than from a traditional financial institution such as a bank. One of the main reasons is that moneylenders can often offer more flexible terms and conditions than banks, which can be helpful for borrowers who have less-than-perfect credit histories.

Another advantage of borrowing from a moneylender is that the application process is often quicker and simpler than it is at a bank. Moneylenders also tend to be more accessible than banks, which can be helpful for borrowers who live in rural areas or who have limited transportation options.

One of the biggest advantages of taking out a loan from a moneylender is that the interest rates are often much lower than the rates charged by payday lenders and other types of short-term lenders. This can make a big difference in the overall cost of the loan, which can be helpful for borrowers who are on a tight budget.

Another advantage of loans from moneylenders is that they can often be used for a variety of purposes. Some people use them to consolidate existing debt, while others use them to finance major purchases such as a new car or a down payment on a home. There are also many people who use loans from moneylenders to start their own businesses.

Overall, there are a number of advantages to taking out a loan from a moneylender. However, it is important to remember that these loans should only be used for specific purposes and that borrowers should carefully consider all of their options before taking out any type of loan.

There are many reasons why someone might need to take out a loan. Perhaps they need to make a large purchase, such as a car or a house. Maybe they have unexpected expenses, such as medical bills. Or maybe they simply need some extra cash to tide them over until their next paycheck. Whatever the reason, there are a number of places to get a loan. One option is to borrow from a money lender.

Money lenders are individuals or businesses that lend money to people who need it. They typically charge higher interest rates than banks or other financial institutions . This is because they are taking on a higher risk by lending to people with less-than-perfect credit. There are both positives and negatives to borrowing from a money lender.

On the positive side, money lenders can be a good option for people who need money quickly. They often have shorter application processes and can get the money to borrowers more quickly than banks or other financial institutions. They may also be willing to work with people who have bad credit.

On the negative side, money lenders typically charge higher interest rates than banks or other financial institutions. This can make it more difficult to pay back the loan. Money lenders may also require collateral, such as a car or a house. This means that if you can't repay the loan, the lender can take your property.

Before you borrow from a money lender, be sure to carefully consider the pros and cons. Make sure you understand the terms of the loan and can afford the monthly payments. If you're not sure, consider talking to a financial advisor.

When it comes to securing a loan, there are a number of different options available to borrowers. One option that has become increasingly popular in recent years is using a money lender.

Money lenders are private individuals or companies who offer loans to borrowers. They are typically not affiliated with banks or other financial institutions.

There are a number of advantages to using a money lender for your next loan. First, money lenders typically offer loans with shorter repayment terms than banks. This means you will have to pay back the loan more quickly, but it also means you will pay less in interest.

Second, money lenders often offer loans with lower interest rates than banks. This can save you a significant amount of money over the life of the loan.

Third, money lenders are typically more flexible than banks when it comes to loan terms and conditions . This means they may be more willing to work with you if you have less-than-perfect credit or if you need a loan for a specific purpose.

Fourth, money lenders can often provide loans more quickly than banks. If you need cash fast, a money lender may be your best option.

There are also some disadvantages to using a money lender for your next loan. First, because they are not regulated by the government, money lenders can charge higher interest rates than banks. This means you could end up paying more in interest over the life of the loan.

Second, because money lenders are not subject to the same regulations as banks, they may not offer the same level of consumer protection. This means you could be at risk of being taken advantage of by a money lender.

Third, because money lenders are not required to follow the same lending practices as banks, they may not be as transparent about their loan terms and conditions. This could make it difficult to understand exactly what you are agreeing to when you take out a loan with a money lender.

Before you decide to use a money lender for your next loan, it is important to carefully consider the pros and cons. weigh the advantages and disadvantages carefully to determine if using a money lender is the right choice for you.

When you're short on cash and need money fast, it can be tempting to turn to a moneylender. But before you do, there are a few things you should think about first.

1. Can you afford the repayments?

Moneylenders typically charge high interest rates, so its important to make sure you can afford the repayments before you take out a loan. Use our loan repayment calculator to work out how much your loan would cost you each month.

2. What are the fees?

As well as interest, moneylenders may charge other fees, such as an application fee, a late payment fee or a penalty fee for early repayment. Make sure you're aware of all the fees before you apply for a loan.

3. How long will it take to repay the loan ?

Moneylenders typically offer short-term loans with terms of around 12 months. This means you'll need to repay the loan in full, plus interest and fees, within a year. If you cant afford to do this, you may want to consider another option, such as a personal loan from a bank .

4. What happens if you cant repay the loan?

If you cant repay a moneylender loan, the lender may take legal action against you. This could include taking money from your wages (known as garnishing) or selling your possessions to repay the debt.

5. Are moneylenders regulated?

In Singapore, moneylenders are regulated by the Moneylenders Act and must be licensed by the Registry of Moneylenders. If you're thinking of taking out a loan from a moneylender, make sure they are licensed by checking the Registry of Moneylenders website.

Taking out a loan is a big decision and should not be taken lightly. If you're considering taking out a loan from a moneylender, make sure you understand the risks involved and compare your options before making a decision.

Considering using a moneylender Here are some things to think about first - The Pros and Cons of Getting a Loan from a Money Lender

When you're in need of quick cash, you may be considering a loan from a moneylender. While this option can provide you with the funds you need in a pinch, there are some pros and cons to consider before making your decision.

On the plus side, moneylenders are often more flexible than banks when it comes to loan requirements. They may be willing to work with you if you have bad credit or are self-employed. Moneylenders also typically have a quicker and more streamlined application process than banks.

On the downside, moneylenders typically charge higher interest rates than banks. This means you'll end up paying more in the long run if you take out a loan from a moneylender. There is also the risk of getting scammed by a disreputable moneylender. Make sure you do your research before borrowing from any lender.

So, should you get a loan from a moneylender? Ultimately, the decision is up to you. Consider both the pros and cons before making your decision.

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When you are in need of cash, you may be considering a loan from a moneylender. Moneylenders are private individuals or companies who lend money at high interest rates. Taking out a loan from a moneylender can be helpful in some situations, but there are also some drawbacks to consider.

benefits of Taking Out a loan from a Moneylender

One benefit of taking out a loan from a moneylender is that the process is typically very fast. If you need cash quickly, a moneylender can be a good option. Moneylenders do not usually require a credit check, so even if you have bad credit, you may be able to get a loan.

Another benefit of taking out a loan from a moneylender is that you may be able to negotiate the terms of your loan . For example, you may be able to negotiate a lower interest rate or a longer repayment period. This can be helpful if you are struggling to make your loan payments.

Drawbacks of Taking Out a Loan from a Moneylender

One of the biggest drawbacks of taking out a loan from a moneylender is the high interest rate . Moneylenders typically charge much higher interest rates than banks or other financial institutions. This means that you will end up paying more in interest over the life of the loan.

Another drawback of taking out a loan from a moneylender is that you may be required to provide collateral. This means that if you default on your loan, the moneylender can take possession of your property. This can be a risk if you are unable to make your loan payments.

Before taking out a loan from a moneylender, it is important to consider the pros and cons. Consider whether you can afford the high interest payments and whether you are willing to risk losing your property if you default on the loan.

When you're in need of quick cash, you may be considering a moneylender as a source of funds. Depending on your circumstances, this could be a good or bad idea. Here are a few things to consider when weighing up the pros and cons of getting financial help from a moneylender.

Pro: You May Get the Money You Need Quickly

If you need cash fast, a moneylender could be a good option. Some moneylenders are able to approve and fund loans within 24 hours, so you could have the money you need in your account quickly. This can be helpful if you have an emergency expense that cant wait.

Con: You May Have to Pay Higher Interest Rates

One downside of borrowing from a moneylender is that you may have to pay higher interest rates than you would with other types of loans . This is because moneylenders typically lend to people with bad credit, so they see higher risk and charge higher rates to offset that risk.

Pro: There May Be Fewer Requirements

Another advantage of borrowing from a moneylender is that there may be fewer requirements in order to qualify for a loan. For example, some moneylenders don't require a minimum credit score or proof of income in order to qualify for a loan. This can make it easier to get the money you need, even if you don't have perfect credit.

Con: You May Have to Put Up Collateral

One downside of borrowing from a moneylender is that you may be required to put up collateral in order to qualify for the loan. This means if you cant repay the loan, the moneylender could take your collateral (such as your car or house) in order to recoup their losses.

Pro: You May Be Able to Negotiate Terms

Another advantage of borrowing from a moneylender is that you may be able to negotiate the terms of your loan. For example, you could try to negotiate a lower interest rate or a longer repayment period. This can help make the loan more affordable and easier to repay.

Con: You May Be Dealing with Unlicensed Lenders

One downside of borrowing from a moneylender is that there is always the risk of dealing with an unlicensed lender. This could lead to problems such as not getting the money you were promised or being charged hidden fees. Its important to research any moneylender you're considering borrowing from to make sure they are licensed and reputable.

Taking all of these factors into consideration, borrowing from a moneylender can be a good or bad idea depending on your individual circumstances. If you need cash quickly and can afford to pay higher interest rates, a moneylender could be a good option. However, if you don't have perfect credit or are worried about putting up collateral, you may want to consider other options.

I am an entrepreneur in the entertainment industry. Somewhere early on when I couldn't get something I wanted through the system, I threw up my hands and tried to figure a way to get it done myself. A lot of it came from my upbringing. My dad was an entrepreneur. Mike Binder

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That Money You Borrowed? Remember Who Owns It

A new study shows that many people go into debt because they disregard that the money is not really theirs.

January 22, 2020

Researchers found that people perceive credit card debt and traditional bank loans differently, even though both require borrowing money. | Illustration by Alvaro Dominguez

In 2019, U.S. consumer debt reached an all-time high, surpassing levels last seen during the 2008 financial crisis. Such debt takes many forms, including mortgages and student loans. But credit card debt alone exceeded $870 billion, and most of that is the result of discretionary spending. Why are so many Americans needlessly putting themselves in the hole?

The answer might lie in the psychological profile of the debtor, according to Stephanie M. Tully, an assistant professor of marketing at Stanford Graduate School of Business. In a recent paper , Tully and her coauthors found that not all consumers feel the same way about available financing.

On one side of the continuum are those who perceive borrowed money to be entirely their own, and thus are more willing to spend it freely. On the other side are those who perceive such funds as decidedly not their own. This latter group is more likely to see the money as belonging to the bank, and thus more conservative about how they spend the money.

“What we found is that people’s feelings about the ownership of money can predict their interest in taking on debt,” Tully says. “It seems some people are fine with going into debt as long as it doesn’t feel like debt.”

The idea of psychological ownership of money came to the research team when they realized that consumers often use more costly forms of borrowing like credit cards rather than cheaper options such as personal loans. The researchers wondered if funding through credit cards felt less like debt than other forms of borrowing.

“There are times when debt can be beneficial,” she says. “You invest in a home or higher education. But the choice to go into debt over discretionary purchases isn’t a rational calculation, and for many it’s suboptimal.”

The Psychology of Borrowing

Tully and her coauthors, Eesha Sharma of Dartmouth and Cynthia Cryder of Washington University in St. Louis, are the first to explore the “psychological ownership of money” and its link to consumer debt. “Nobody’s really tried before to measure this feeling of ownership and its effects on borrowing habits,” she says.

The researchers found that the sense of psychological ownership — a concept first used in management literature to describe employee attitudes toward organizations — is distinct from such factors as debt aversion, financial literacy, income, and self-control, and that it’s even more predictive of one’s willingness to incur debt. The more consumers feel a sense of ownership over-borrowed funds, the more likely they are to use those funds.

To demonstrate this, the researchers conducted eight studies that used various methods to measure psychological ownership of money. The first pair of studies presented each participant with a real ad (one used an Amazon credit card ad, another used a personal loan ad from American Express), measured psychological ownership of the available financing, and then gauged their interest in the offer.

Another group of studies compared perceived ownership across debt types (credit cards, lines of credit, loans, and payday loans). In other experiments, the researchers offered identical borrowing options using different language, the variable being the marketing literature’s emphasis on “ownership.”

Quote It seems some people are fine with going into debt as long as it doesn’t feel like debt. Attribution Stephanie M. Tully

In the first two studies, as predicted, those who scored high on the “psychological ownership” scale were more willing to incur debt. The second group of studies showed that the type of debt matters, too (credit, for example, inspires feelings of ownership more than loans). And it turns out that psychological ownership is malleable: When marketing language for borrowed money de-emphasized ownership, there was less interest in the offer.

Crucially, it’s not that participants failed to understand the terms of the credit card or loan offer. Everyone in these studies knew that the money had to be repaid; they differed only in how much they felt the borrowed money was theirs.

A final pair of studies found that differences in psychological ownership across debt types even manifest in online searches.

“When people are considering credit cards, which are high in psychological ownership, they are more likely to use search terms, such as ‘spending,’ that reflect they feel like the money is theirs,” Tully says. “But when they search for loans, which are low in psychological ownership, they are more likely to use search terms, such as ‘repayment,’ that reflect they feel like the money is owed.”

Beyond Financial Literacy

There are many possible reasons why some consumers have a higher sense of psychological ownership over borrowed money. Research has shown that certain borrowers see their credit limits as an indicator of future earnings, which suggests that such people feel they are borrowing from their future selves, as opposed to a lender. It might also be that some are deceived by “motivated reasoning,” a cognitive bias toward processing information in a way that confirms preexisting beliefs or emotions. After all, the money helps produce desired outcomes.

“We hope to explore this further,” Tully says. “The purpose of this paper is really to understand that people experience different degrees of psychological ownership toward borrowed money and that it influences their behavior.”

The research also has implications for those designing products or programs that push financial literacy, many of which have had mixed success, especially at a time when fintech innovations have led to more lending options, and therefore an overall increase in loans .

“This research suggests that it may be less about understanding the details of compound interest and more about basic attitudes,” Tully says. “If you can change the way people think about borrowed money from an early age, that could make an impact across their lifetime. Credit card companies do a great job of making us feel like they’re granting us access to our money. They’re not. It’s important to understand that this is debt.”

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Psychological Ownership of (Borrowed) Money Eesha Sharma Stephanie M. Tully Cynthia Cryder

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949 Words Short Essay on Borrowing Money

Borrowing money is a most dangerous practice whenever any difficulty in the repayment is to be anticipated, that is to say, in the circumstances in which men ordinarily think of borrowing, poor, as a rule, men have recourse to this expedient when their expenditure exceeds their income, or when they wish to spend more than they can earn.

In such cases by means of borrowing we are enabled more easily to violate the salutary rule of pru­dence, which tells us never to spend more than our income.

Any one who borrows under these circumstances seldom sees any definite prospects of repayment, and it would be far better for him to restrict his expenses to the purchase of the barest neces­sities of life, than thus to throw upon his shoulders the burden of a debt that he does not know how to pay.

Image Source: cathyballard.com

The borrower either entreats a loan from a friend as a favour, or receives it from strangers as a matter of business. The former plan has the advantage of perhaps giving you as loan at a lower rate of interest than that at which you could borrow from a banker. In many cases friends lend money free of interest.

But nevertheless there are serious objections to this mode of borrow­ing, the greatest of which is that it generally has a prejudicial effect on friendship. It is very difficult for a debtor and creditor to continue to be friends. In the first place, many persons are offended when their friends ask for a loan.

They think they are being imposed upon, and declare that they would much rather be asked for a gift outright. Indeed, in some ways it is more prudent to give than to lend money. The man who lends money expects to be repaid, and, when he has incurred expenses.

In the expec­tations of being repaid at a certain date, the disappointment of this expectation may entail very serious consequences. If he had made a gift, he would have known that so much was subtracted from his ready money, and would have regulated his expenses accordingly.

It is a strange fact that the recipient of a loan also is in danger of becoming less friendly to the friend who has tried to do him a benefit. He may be weighed down by the obligation, and feel Resentment on account of the position of inferiority to which he has been reduced by becoming a debtor.

On this account, and also from the fear of being asked for repayment, he is likely to keep out of the way of his friend and creditor. A story is told of a man who, being thus avoided by his friend to whom he had lent money, said to him, “Either give me back my money or give me back my friend.”

Besides being dangerous to friendship, borrow­ing from friends often leads to base deception. The confirmed borrower is apt to go for money to women, who are so ignorant of business that they are utterly unable to see the danger to which they expose themselves and are easily imposed upon. In this way many have been reduced to destitution by the art of unscrupulous borrowers.

If one must borrow at all, it is in some respects better to go to the professional money-lender, who will charge interest ac­cording to the amount or risk, rather than to our friends and relations. By this kind of borrowing we at any rate avoid the sense of obligation, and are not tempted to do harm to those who love us by imposing upon their ignorance.

Only we must remem­ber that, unless we are extremely circumspect, we cannot borrow without incurring a greater danger of ruining ourselves. In old times the debtor who could not pay actually became the slave of his creditor. In modern times those who borrow money that they cannot pay, though nominally freemen, are virtually deprived of their independence.

One loan leads to another on harder terms, until the poor debtor retains for himself only enough of his earn­ings to keep body and soul together, and pays the rest to his creditors.

He is thus, to all intents and purposes, a slave, because he has nothing that he can truly call his own, and all his labours benefit not himself but those from whom he has borrowed money.

Therefore, it is well to think twice before making the first step on a downward course which may lead to such ruinous results. However, it is impossible to lay down an absolute rule against borrowing. In business we know that borrowing even on a large scale is often a perfectly legitimate operation.

In private life, also, it is sometimes prudent to borrow in time of great emergency even from our friends. For instance, if a poor student is conscious of good abilities, and a rich relative is willing to lend him money for the expenses of his education, there is no reason why he should not accept the assistance of a loan.

When by honest work at school and college he has gained the means of paying the debt, the mutual feeling of kindliness between himself and his benefac­tor will be increased by the transaction.

There are also many other times of temporary distress due to sudden illness or unavoidable misfortune, in which it may be advisable to borrow money. So that the rule against borrowing should not be laid down too absolutely.

We must content our­selves with clearly recognizing the evil results that usually spring from the use of other people’s money, and, if we are ever com­pelled to borrow, we should never rest until we have succeeded in discharging our debt.

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Essay on Money

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6 reasons why you should never lend money to friends or family.

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Did you know that more than half of people have seen a friendship end because of money owed?

You might think helping your broke friend is the right thing to do, but doing so could totally ruin your relationship. If you need some convincing, here are six reasons why lending money to friends or family is a bad idea.

1) You’re a last resort

They’re likely coming to you because they can’t get a loan from a bank. That means traditional lenders consider them to be too high risk to lend money to -- and that’s even after considering all the potential interest they could make on the loan.

Most loans to friends and family have a very low or nonexistent interest rate. So by loaning a loved one money, you’re taking on a ton of risk for a fraction of the payout a bank would normally get.

2) You’ll probably never get paid back

Nearly three quarters of people who borrow money from friends or family never pay the loan back in full .

Rather than expecting to get paid back, you should view the loan as a gift in your mind. Chances are you’ll never see that money again, so only lend as much as you are comfortable parting with.

3) You could be enabling your loved one

The majority of loans consist of parents lending money to their adult children. Sometimes the reason for the loan is a good one, like a one-time emergency that was completely unexpected.

But often times the reason isn’t sound and helicopter parents are simply rewarding bad financial habits. If your kids think you will bail them out of any bad financial situation they get themselves into, then they’ll never be incentivized to develop good money habits.

4) You might actually need the money

Unexpected emergencies and job losses happen. And when they do, you’ll need extra money to pay your bills and stay afloat. If you have an extremely well stocked emergency fund, then maybe you won’t miss the money that you lent out.

But only a quarter of Americans have more than $10,000 in their savings account. So if you’re like most people, you’ll want your money back as soon as possible. Draining your savings to help out a friend could leave you in the same position as them in the near future.

5) Having to repeatedly ask for overdue payments will get awkward

Since most loans are never repaid, there’s probably going to be a point where your friend or family member falls behind on payments. When that happens, it’s up to you to follow up with them about their late payment. And that conversation is going to be incredibly awkward.

But it gets worse. They’re likely going to keep falling behind on payments. And you’re going to have to keep following up with them each time to let them know they’re late.

6) It could ruin your relationship forever

After a few late payments, you’ve essentially become a debt collector for your loved one. And this fact will affect your relationship.

You’ll be upset that they didn’t pay you back which shows that keeping promises to you just isn’t a priority for them. And they’ll feel uncomfortable every time they see you because they know they owe you money. Holiday dinners and going out with your friend group will now come with a ton of baggage.

If you are going to loan money to a friend or family member, do it the right way and put an agreement in writing. Otherwise, consider your loan as good as gone.

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IELTS Essay: Money

by Dave | Real Past Tests | 1 Comment

This is my IELTS writing task 2 sample answer essay on the topic of talking about money from the real IELTS exam.

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In many countries, people increasingly talk about money such as how much they earn or how much they pay for things in their daily conversations.

Is this a positive or negative trend?

It has become increasingly pervasive in recent years for individuals to discuss money matters on a daily basis. In my opinion, this is due to changes in what individuals consider polite and is a decidedly negative trend on the whole.

The reason people now talk about money is that it is socially acceptable. In past generations, discussing money was considered “in poor taste” and most people were reserved in order to not appear arrogant or desperate. Today, many social norms from the past have disappeared and this includes ones related to the discussion of one’s finances. This enables the average person to discuss money with friends and family as a way of coping with anxieties about the future or insecurities about their own status in society. For instance, it is common for some wealthy individuals to show off by talking about their investments, property, and so on to impress friends and elevate their own self-esteem.

Discussing money is overall a negative trend as it exacerbates an unhealthy mindset. There are situations where it can be positive, such as when discussing potential investments and helping friends. These contexts are the exceptions, however, as most people simply talk about money to relieve their own nervousness or as a form of bragging. Once a person becomes addicted to the minor dopamine bursts that accompany seeking self-pity or self-aggrandizement, they will have a difficult time transitioning to more productive and fun topics of conversation. Over time, a person may ironically increase their anxieties and insecurities by seeking to cope with them.

In conclusion, people talk about their finances as it is no longer considered rude and it is an unhealthy habit. It is better to talk about to more important topics.

1. It has become increasingly pervasive in recent years for individuals to discuss money matters on a daily basis. 2. In my opinion, this is due to changes in what individuals consider polite and is a decidedly negative trend on the whole.

• Paraphrase the overall essay topic.
• Write a clear opinion. Read more about introductions here .

1. The reason people now talk about money is that it is socially acceptable. 2. In past generations, discussing money was considered “in poor taste” and most people were reserved in order to not appear arrogant or desperate. 3. Today, many social norms from the past have disappeared and this includes ones related to the discussion of one’s finances. 4. This enables the average person to discuss money with friends and family as a way of coping with anxieties about the future or insecurities about their own status in society. 5. For instance, it is common for some wealthy individuals to show off by talking about their investments, property, and so on to impress friends and elevate their own self-esteem.

• Write a topic sentence with a clear main idea at the end.
• Explain your main idea.
• Develop it with specific or hypothetical examples.
• Keep developing it fully.
• Finish the paragraph strong.

1. Discussing money is overall a negative trend as it exacerbates an unhealthy mindset. 2. There are situations where it can be positive, such as when discussing potential investments and helping friends. 3. These contexts are the exceptions, however, as most people simply talk about money to relieve their own nervousness or as a form of bragging. 4. Once a person becomes addicted to the minor dopamine bursts that accompany seeking self-pity or self-aggrandizement, they will have a difficult time transitioning to more productive and fun topics of conversation. 5. Over time, a person may ironically increase their anxieties and insecurities by seeking to cope with them.

• Write a new topic sentence with a new main idea at the end.
• Explain your new main idea.
• Include specific details and examples.
• Add as much information as you can and make sure it links logically.
• Keep adding in the result to develop your ideas more.

1. In conclusion, people talk about their finances as it is no longer considered rude and it is an unhealthy habit. 2. It is better to talk about to more important topics.

• Summarise your main ideas.
• Include a final thought. Read more about conclusions here .

What do the words in bold below mean? Make some notes on paper to aid memory and then check below.

It has become increasingly pervasive in recent years for individuals to discuss money matters on a daily basis . In my opinion, this is due to changes in what individuals consider polite and is a decidedly negative trend on the whole .

The reason people now talk about money is that it is socially acceptable . In past generations , discussing money was considered “in poor taste” and most people were reserved in order to not appear arrogant or desperate . Today, many social norms from the past have disappeared and this includes ones related to the discussion of one’s finances . This enables the average person to discuss money with friends and family as a way of coping with anxieties about the future or insecurities about their own status in society . For instance, it is common for some wealthy individuals to show off by talking about their investments , property , and so on to impress friends and elevate their own self-esteem .

Discussing money is overall a negative trend as it exacerbates an unhealthy mindset . There are situations where it can be positive, such as when discussing potential investments and helping friends. These contexts are the exceptions , however, as most people simply talk about money to relieve their own nervousness or as a form of bragging . Once a person becomes addicted to the minor dopamine bursts that accompany seeking self-pity or self-aggrandizement , they will have a difficult time transitioning to more productive and fun topics of conversation . Over time , a person may ironically increase their anxieties and insecurities by seeking to cope with them .

For extra practice, write an antonym (opposite word) on a piece of paper to help you remember the new vocabulary:

It has become increasingly pervasive in recent years for it is more common now

discuss money matters on a daily basis talk about finances every day

this is due to changes in this is mostly because of

consider polite think is nice

decidedly negative trend on the whole bad overall

socially acceptable good for society

In past generations before

considered “in poor taste” not a polite thing to say

reserved in order to not appear arrogant or desperate polite so that you don’t seem prideful or needy

social norms what is considered polite by society

disappeared went away

discussion of one’s finances talking about your money

enables allows

average person normal citizen

coping with anxieties about dealing with nervous feelings related to

insecurities doubts

status in society how you are perceived in the world

wealthy individuals rich people

show off brag

investments money put into

property things you own

impress friends show off to friends

elevate their own self-esteem feel better about themselves

overall a negative trend on the whole is bad

exacerbates makes worse

unhealthy mindset not a health way to think about it

situations contexts

potential investments possible places to put your money

These contexts are the exceptions these situations are rare

relieve their own nervousness less their anxiety

as a form of bragging a way of showing off

addicted to the minor dopamine bursts that accompany seeking self-pity or self-aggrandizement get used to the pleasure that comes from feeling bad about yourself or bragging

difficult time transitioning to hard time changing

productive useful

fun topics of conversation interesting things to talk about

Over time as life goes on

ironically surprisingly

by seeking to cope with them trying to deal with them

no longer considered rude not impolite any more

Pronunciation

Practice saying the vocabulary below and use this tip about Google voice search :

ɪt hæz bɪˈkʌm ɪnˈkriːsɪŋli pɜːˈveɪsɪv ɪn ˈriːsnt jɪəz fɔː   dɪsˈkʌs ˈmʌni ˈmætəz ɒn ə ˈdeɪli ˈbeɪsɪs ðɪs ɪz djuː tuː ˈʧeɪnʤɪz ɪn   kənˈsɪdə pəˈlaɪt   dɪˈsaɪdɪdli ˈnɛɡətɪv trɛnd ɒn ðə həʊl ˈsəʊʃəli əkˈsɛptəbᵊl ɪn pɑːst ˌʤɛnəˈreɪʃᵊnz kənˈsɪdəd  “ ɪn pʊə teɪst “ rɪˈzɜːvd ɪn ˈɔːdə tuː nɒt əˈpɪər ˈærəʊɡənt ɔː ˈdɛspərɪt ˈsəʊʃəl nɔːmz   ˌdɪsəˈpɪəd   dɪsˈkʌʃᵊn ɒv wʌnz faɪˈnænsɪz   ɪˈneɪbᵊlz   ˈævərɪʤ ˈpɜːsn   ˈkəʊpɪŋ wɪð æŋˈzaɪətiz əˈbaʊt   ˌɪnsɪˈkjʊərɪtiz   ˈsteɪtəs ɪn səˈsaɪəti ˈwɛlθi ˌɪndɪˈvɪdjʊəlz   ʃəʊ ɒf   ɪnˈvɛstmənts   ˈprɒpəti ˈɪmprɛs frɛndz   ˈɛlɪveɪt ðeər əʊn sɛlf-ɪsˈtiːm ˈəʊvərɔːl ə ˈnɛɡətɪv trɛnd   ɪɡˈzæsəbeɪts   ʌnˈhɛlθi ˈmaɪndsɛt ˌsɪtjʊˈeɪʃᵊnz   pəʊˈtɛnʃəl ɪnˈvɛstmənts   ðiːz ˈkɒntɛksts ɑː ði ɪkˈsɛpʃᵊnz rɪˈliːv ðeər əʊn ˈnɜːvəsnəs   æz ə fɔːm ɒv ˈbræɡɪŋ əˈdɪktɪd tuː ðə ˈmaɪnə ˈdəʊpəmiːn bɜːsts ðæt əˈkʌmpəni ˈsiːkɪŋ sɛlf-ˈpɪti ɔː sɛlf-əˈɡrændɪzmənt ˈdɪfɪkəlt taɪm trænˈzɪʃᵊnɪŋ tuː   prəˈdʌktɪv   fʌn ˈtɒpɪks ɒv ˌkɒnvəˈseɪʃᵊn . ˈəʊvə taɪm aɪˈrɒnɪkəli   baɪ ˈsiːkɪŋ tuː kəʊp wɪð ðɛm nəʊ ˈlɒŋɡə kənˈsɪdəd ruːd  

Vocabulary Practice

I recommend getting a pencil and piece of paper because that aids memory. Then write down the missing vocabulary from my sample answer in your notebook:

I__________________________________________r individuals to d_________________________________s . In my opinion, t___________________________n what individuals c_________________e and is a d_________________________________e .

The reason people now talk about money is that it is s_________________________e . I______________________s , discussing money was c_______________________e” and most people were r_______________________________________________e . Today, many s_______________s from the past have d_____________d and this includes ones related to the d______________________s . This e__________es the a_______________n to discuss money with friends and family as a way of c___________________________t the future or i________________s about their own s_______________y . For instance, it is common for some w__________________s to s____________f by talking about their i_______________s , p___________y , and so on to i______________s and e______________________________m .

Discussing money is o_____________________d as it e_______________s an u___________________t . There are s_____________s where it can be positive, such as when discussing p___________________s and helping friends. T_________________________s , however, as most people simply talk about money to r________________________s or a_____________________g . Once a person becomes a___________________________________________________________________________________________________________________t , they will have a d_________________________o more p___________e and f__________________________n . O_________e , a person may i____________y increase their anxieties and insecurities b________________________________m .

In conclusion, people talk about their finances as it is n______________________________e and it is an unhealthy habit. It is better to talk about to more important topics.

Listening Practice

Learn more about this topic by watching from YouTube below and practice with these activities :

Reading Practice

Read more about this topic and use these ideas to practice :

https://www.cnbc.com/2009/07/22/The-Worlds-Most-Beautiful-Currencies.html

Speaking Practice

Practice with the following speaking questions from the real IELTS speaking exam :

• How important is it for people to set goals?
• Do people set different goals at different stages of life?
• Are personal goals more important than professional goals?
• What sort of goals do young people today set?
• Are people becoming more pessimistic about their life goals?

Writing Practice

Practice with the related IELTS essay topics below:

Older people often choose to spend money on themselves (e.g. on holidays) rather than save money for their children after retirement.

Is this a positive or negative development?

https://howtodoielts.com/ielts-ebook-money/

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