It is often tempting to ask friends or relatives when you urgently need money. It's not so important for small sums of money, but you need to be careful with larger amounts. Not everything is as it seems, even people you think you know well can be different than you thought. As a rule, you can only trust yourself or a reputable financial institution.
The general motto for loans is also: it is better to separate business from personal matters. For many people, friendship ends with money, and it is often not worth losing a good friend. But you also have to be very careful with relatives or acquaintances, especially if it involves a large sum and you are contractually bound to this person for years.
I myself had two drastic experiences with private loans. I have bitterly regretted both of them. My biggest mistake was that I assumed that other people think and act exactly like me. Our biggest weakness is that we can't communicate well with each other, which leads to misunderstandings and hostility. Especially when it comes to money.
When I was in my early twenties, I wanted to make a major purchase. I knew that my grandmother had saved up quite a bit of money, so I thought I'd just ask her if she'd put something forward for me. It was about €3,000. I went to her and told her my plan. I explained to her exactly what I wanted to buy and how I would pay it back within 6 months. I even suggested that she draw up a contract and put everything in writing because I didn't want her to feel like I was taking advantage of her. She didn't seem at all reluctant, dismissing me with the words that I could already finalise the contract.
A day later, she left a message on my answering machine in which she rudely turned me down and insulted me. She didn't give me an explanation for her change of heart, but I wouldn't have asked her to, I had also told her at the beginning that she could just say "no" if she didn't want to lend money. After this incident, we didn't speak to each other again for five years because she made it clear to me through my parents that she was angry with me and didn't want any more contact.
My parents have since reconciled with each other, but we can't make up for lost time and it wasn't worth it.
The second incident is unfortunately still ongoing. My husband and I bought a house. However, the bank demanded 20 % equity (at least), but we only had 10 %. Then the old owner of the house (a man we only knew in passing) agreed to give us a private loan for half the purchase price, so that the bank would only have to lend us half as much money, i.e. we would then have the required 20 %. Unfortunately, we went along with this because the gentleman made an honest impression and we wanted the house. The contract was discussed and drawn up, and everything went according to plan. However, the former owner of the house, our creditor, has since turned 180 degrees. He had not received the first payment on time, through his own fault, because he had (demonstrably) given an incorrect account number. For some reason, however, he was always of the opinion that we had the "obligation to pay" and should have seen to it that he got his money on time. Reasonable discussions were not possible.
He turned out to be a choleric and very unhappy person who is always looking for a scapegoat. As a result of this incident, we have now become his scapegoat. We did everything we could to always have the payment in his account on time so as not to upset him, and even brought the monthly instalment forward by half a month from the start so that we would have a little more time in case something went wrong. This gesture had the opposite effect. He accuses us of all sorts of things that I either can't understand myself or that have no bearing on the matter. The worst thing about the whole thing is that the contract runs for twenty years, which means we still have many years ahead of us in which we have to expect the worst. A person like him is no longer open to arguments and has formed his opinion about us. In his eyes, we are the ones he can't trust.
I would like to use the second example in particular to warn you against taking out a loan from private individuals. It is not enough to be secured in writing, because people can be very unsavoury and do unforeseen things.
A bank or other official credit institution lends money every day and has systems for everything. You are just a number there, it has little to do with personal contact. It's not the employees' own money either, so they're not emotionally interested in your case. If you can't pay, the house will be sold or whatever. These are clear guidelines that you can live with. And if a bank rejects the loan, that should give you pause for thought. Maybe the bank is right and you can't actually afford it.
