I have never borrowed money from family or friends to avoid paying interest, I have, however been in the spot of loaning money to friends, and needless to say, have been disappointed by them. The first time was to a friend who was losing his business and needed $3,000 immediately. We loaned him the money, he lost the business, and he moved to another state.

Another time, we loaned a friend $500.00 to help him pay his rent. He said that he and his family (wife and 7 kids) were on the verge of being evicted. We loaned him the money, then didn't hear from him in a few months. My husband happened to run into him at a friend's house. In a drunken stuper, he confessed that they bought cocaine with the money, and were evicted, and he and his family were living with different friends and family members until they could find a different house to rent. Of course he never paid us back.

I can only say that I was very disappointed by these actions, and the friendships with these people are completely dissolved. But I don't think either case would prevent me from helping someone else out if they asked. I would try to keep in mind to only loan out an amount that I can afford to lose. If they pay me back, great. If not, then it's on their conscience and they proved that they are not the person I thought they were.

I did that several times while I was in college. I borrowed some money from my elder brother to help a friend but paid back the moment I had the money (without interest). Although it took about a year because I had to be sure my friend had given me the complete refund before paying my brother. He told me he was not expecting me to pay back after that long period, but was glad I did.

I also remember the first time I borrowed some money from my dad to avoid paying interest. I told him I was going to pay back in six months time and only paid 3/4 of it. But while I was at a youth conference, the guest speaker said something about financial freedom starting from home and I remembered that I still owed my dad some money. When I got back home, I took up an extra job, raised the money and paid him in interest. My dad was so surprised when I told him how I got the money. He took the money from me and gave it back to me a month later as a birthday gift.

I have to say I used to take advantage of my big brother and my dad, but I always pay back. Now that I am older, I don’t borrow from them or any friend.

http://www.state.sd.us/governor/images/Photo%20Gallery/2004/Rounds%20Family/Rounds%20Family.jpg

Being that I’m known as a miser, I am surprised that I never considered borrowing from family or friends as a way to not incur finances chargesJ While the amount of actual cash I’ve borrowed from family was relatively small, a family member did allow me to put a balance on their credit card because I was leaving a company and had to pay back the reimbursement they had given me for school all in one sum.

While they didn’t put pressure on me to have it paid off by a certain time, I made it a priority to make sure to pay more on that person’s card than my own so their balance would be paid off faster. I figure they didn’t have to put their neck on the line for me so the least I could was to pay it off in a reasonable amount of time so as to show how much their gesture was appreciated.

However, I wouldn’t recommend to make a habit of borrowing from family or friends because money can sometimes put a strain on any relationship.

I borrowed money from my dad for a house downpayment. He was able to borrow at a lower interest rate than I could and offered to lend it to me (so I would buy a nicer house on a nicer street than the house I was otherwise going to buy). So I borrowed from a family member to pay less interest. I pay the loan payment to my dad 5 days before he pays it to the bank and he charges me the same interest they charge him. After I buy a replacement for my car (used), I'll pay extra to my dad to pay off the loan sooner. I one time asked my dad to defer my payment one month (my driveway leaked into the house and I had to have it replaced all quick-like and didn't have enough saved to pay for it). I paid double the payment + the extra interest the next month to my dad. I consider it more important to pay my dad than the gas bill. The payment I make to my dad is included in my emergency fund as an essential expense.

My brother borrowed his house downpayment from my dad also. My dad's name is on my brother's mortgage and whenever my brother sells the house (probably never) he has to repay my dad. Dad borrowed the money to give him the downpayment and my brother does not (and couldn't afford to) repay him. Dad eats the interest on the loan.

I've had friends ask to borrow money from me. If it's $10, no problem. However, if it's more than I can afford to lose, I just say no. Some people conveniently forget they owe others money and I'm not really interested in fighting with a friend or family member over money. I'd be VERY unlikely to lend my brother money unless he would have some horrible consequence. He handles money decently, but his wife will buy new jeans over paying the mortgage.

I have borrowed money from someone I know but in some cases where the amount was high, I offered to pay interest on the loan because it is only fair. They would lose interest on money that should be theirs so it is only fair that they be compensated.

Generally I don't think it is a good idea to borrow money from friends and family unless you are absolutely sure you will be able to pay it back in a timely fashion. Bad relationships will develop if you keep a loan unpaid for an extended period of time. It has happened in my family and let's just say things got pretty ugly. I have also lost friends who I thought I could trust when I lent them money. I was wrong.