Borrowing from friends and family: the pros and cons

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Since the economy took a nosedive in 2008, the number of people borrowing from friends and family has been on the rise. In fact, according to StepChange – a charity that offers help and advice to those in debt – one in four people are borrowing from friends and family, with the average amount borrowed up to around £4,000.

Just take a look at these figures – taken from the last few years – to see how widespread borrowing from the Bank of Mum and Dad is:


Total debt to friends

and family

Average Debt


% of clients


Amount of people


First half of 2014









First half of 2015









First half of 2016










Figures taken from StepChange


That means that – at present – people around the UK owe a crazy £200 million to their friends and family.


The advantages of borrowing from friends and family


Of course, the reasons for this high figure are the obvious benefits of borrowing from friends and family: it’s informal, it’s quick, it’s flexible and – best of all – there’s (usually) no interest. On top of that, friends and family often are keen to help you out however they can – especially if you’re in a financially sticky situation.

That means that there’s no long application process, no credit checks and – as a result – no history of the debt on your credit file. Friends and family are also often happy to lend small amounts – of a few hundred pounds, for instance – that you’d be unable to get from a conventional lender.

Which means – if you’ve got a good repayment history and are sure that you can pay the money back – then borrowing from friends and family is a great move. After all, it’s been the way people have borrowed money for as long as we can remember.

However, it’s not without its drawbacks.


The cons of borrowing from friends and family


Borrowing from friends and family can lead to a whole host of problems, from worsened financial issues to the break-up of family relationship and friendships. In fact, according to the same report by StepChange, one in three people who borrowed money from loved ones experience negative effects in their relationship, with 5% of those interviewed reporting that borrowing money had led to the complete breakdown of their relationship.

On top of that, borrowing from friends and family doesn’t always solve the problem. In fact, borrowing can sometimes make the debt problem worse by providing a short-term solution to a long-term problem.

Mike O’Connor, Chief Executive of StepChange, told The Spectator:


It is good that people support their friends and family, but lending them money can bring serious and unexpected problems.

If they are already in financial difficulty, more borrowing is not necessarily the answer and it can make things worse. People need to take practical action to solve the underlying debt problem.



How can friends and family can help you out without putting their hands in their pockets?


If you’re looking to borrow from friends and family, but aren’t sure if they can afford it (or if they’d want to part with their savings), there is another solution: asking them to be a guarantor for a loan.

You’ll borrow the money from a lender, but a friend or family member will guarantee your application (in other words, agree to pay your repayments if you default) to give you access to better rates and larger amounts.

That way, your friends and family are helping you borrow money without having to worry about losing their savings or severing lifelong friendships.To find out more, check out this quick introduction to guarantor loans.

And, if you’re interested, Bamboo offers personalised loan quotes that are tailored specifically to you and your circumstances, showing you exactly how much you could borrow and how much you’d have to repay.

Plus, if you’re accepted, the money could be in your account the same day, if you complete the application process before 3 pm. Representative 49.7% APR.

If you’re considering taking out a guarantor loan – why not get an instant quote today to see how much you can borrow? It’s quick, easy and leaves no mark on your credit history.



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