Speed

• One advantage of borrowing money from friends and family lies in its relative speed compared to borrowing from traditional lending institutions. Borrowing money to buy a car or start a business can take weeks or months when going through a bank; friends and family members may be willing to cut a check on the spot, depending on the level of urgency involved or how much money you're requesting. Friends and family members can also easily pick up the phone to request an immediate bank transfer, with loans landing in your account just a few hours later.
  
  

Processing

• When borrowing money from banks and other groups, you'll typically have to show volumes of documentation attesting to your credit worthiness. This may involve collecting old bank statements, check stubs, tax returns---even divorce papers or bankruptcy documents. Reference checks, multiple meetings with credit professionals and other hoops can make the process quite lengthy. An advantage to borrowing money from friends and family members is that the process is less complex. Since they know and trust you, you'll have less to prove before borrowing can still take place. It's still recommended that you draw up a basic contract with a repayment plan to avoid future disagreement over loan terms.
  
  

Interest

• Another advantage to borrowing money from friends and family is that you'll likely pay lower interest rates and processing fees, making it cheaper and quicker to pay back the loan. Payments will apply to the principal much faster with lower interest rates, and some friends and family members may decide not to charge interest at all. Whatever interest rates are agreed upon, take care to clearly specify this in the loan contract to avoid discord.
  
  

Altruism

• Friends and family may take pride in loaning you money for a worthy pursuit, such as starting a business, attending college or helping pay for a talented grandchild's piano lessons. This sense of altruism is another advantage to borrowing money from loved ones; they'll feel invested in your future success and will enjoy having played a key part in helping you achieve your dreams. Remember that whatever their good intention, however, a loan is a loan: you must pay it back, and according to the terms under which it was given. Many relationships have been damaged because of unpaid loans don't let this happen with your friends and family.