Top 10 Reasons People Lend Money to Friends and Family

1. Legacy: Lending money to children or grand children continues the legacy of the family, especially if those funds are going towards a business or education that will make them self-sufficient. Investing in a business allows the person borrowing the money to survive another day, and the success of that business could bring wealth for generations to come. Legacy is one of the most important topics to build upon.
2. Education: Similar to Legacy, however, people often invest in education and lend money to students even if it is not their child. It is another sense of helping someone better themselves and advance in their carrier and personal development. Husbands and wives, couples dating, friends, associates, and even work environments will lend money towards education.
3. Single Parents, person’s with Dependents: a sensitive topic, however, often single parents find themselves earning under their expenses per month, especially if they don’t have the work experience to be paid higher. There are many wealth building solutions on how to make more money as a single parent, or person who is in a situation where more is going out than coming in, however, first they need help covering what they owe now. Helping a single parent keeps the debts off their credit cards and gives them a fighting chance without the weight of Interest bearing down on them.  This category may also include people who are taking care of an elderly dependent or family member or friend who is not able to take care of themselves.
4. Payday or Late Payment Loans: Often if it is close to someone’s pay day and they need extra month to carry them through until the end of the month, friends and family will give them a loan. This includes consultants who bill clients, and the funds have not come in yet, instances where money is owed that is getting paid or late in getting paid and therefore they need a little help because they where depending on the funds.
5. The Hard Case Loan: In some cases the hard case loan is when a friend or family member is literally buried in debt, interest and payments far exceeds what is coming in and they need to borrow money to pay off existing debts or be pushed into bankruptcy or ruin their credit rating. Generally all of the assets are financed to the hilt, and their last resort is friends and family or bust. The extreme situation they are in will drive friends and family to try and help them. This may also include the person lost their job or doesn’t have sufficient employment or a business that costs them more than they are making.
6. Holiday Loan: The holiday loan can be similar to a pay day loan, where they will not have enough money until the pay check after Christmas. However, it also may be because the person needs money to have a good Christmas with their family and possibly travel to be with someone. In this instance, they need a loan they can pay back after the holidays or over the year.
7. Travel Loans: Before someone goes to take a trip, the first question friends and family ask is “Do you have enough money?” The travel loan is a very common loan between friends and family. This is the loan one would get before they go away, as the friends and family would like to ensure the safety of the traveller and that they have enough money to keep safe and take care of themselves. Often people underestimate the costs once they arrive at a location, therefore, any extra money always comes in handy.
8. Medical Loans: Medical loans are in the cases where someone needs money for an operation, a medical procedure such as plastic surgery or dental work, or a medical emergency takes away income earning potential for a period of time in which help is required financially.
9. Asset Purchase Loan: Friends and family will loan money for the purchase of assets as it is seen as advancing the ones they care for and inevitably it is secure as long as the asset is taken care of. These loans generally are car loans, home loans, office equipment loans, buying a business or franchise loan, etc. Friends are especially inclined to lend the money if it is an asset that both the buyer and the lender can enjoy, such as Boats, Motorcycles, seadoos or skidoos, a summer cabin, etc.
10. Emergency Loan: This is when a person is in dire straits an needs and immediate loan to make payment or they will be put in jeopardy. This may be for an emergency operation, to pay a loan to someone who is causing them personal problems or fears and aggravation, a check has been bounced, money has been stolen, they lost their wallet and can’t get money any other way over a weekend or during a trip, etc. The emergency loan is one of the more common loans, but generally is very small in size in comparison to the others.

These top 10 reasons are all loans that are generally speaking good Karma or thoughtful in their reasoning and justification for lending. Last year in Canada approximately 21 million Canadians either lent or borrowed money from friends or family members, but only 17% actually put the loan in writing. Close to 54% of the undocumented loans were not paid back. It has been proven that if a loan is documented, the likelihood of repayment is significantly higher. Through this process we aim to lessen the default rate to under 5%.

Therefore, we encourage you to go to http://www.kasu.ca and create a loan document today to secure your friend and family loans, and ensure that you get paid back… eventually.