Top 7 Causes If Your Family Loans Go Down

Loans and Borrowings are a common part of every person`s life. Need comes to you without notice, so it not a bad thing to owe any loan. But If you are considering about a family loan application then you must do a thorough study about it. A number of important points are there to think upon.

Let me give you some 7 key factors which mostly become the reason of family loans downfall. I suggest you that you must be aware of them.

1. Communication

Just think before applying for a family loan that why you need this loan? think about your ability to repay this debt. Do you have enough strategies and confidence that you are investing at right place. You should consider them first.

2. Documentation

Whether you are a lender or borrower, in the money matter you must be clear in every single point. Each possible clause and terms & conditions should be with you in black and white. and You must discuss every minor issue about loan deed before signing the documents.

3. Securing the Loan

To secure your loan is a very good idea. the concept of securing the loan is important because if borrower dies before loan repayment. Then the lender can not recover his amount unless the loan is secured by some means. Lender and Borrower should consider the risk and should secure the loans.

4. Tax Laws

To avoid any legal problems, loans should be according to tax laws and you must consult your tax law advisor or attorney. Because as a borrower , you want to deduct the interest cost paid on loan against your total tax liability. If you are lender then you have to show the interest earn on the loan in your wealth statement.

5. Other Specific Laws

Your loan agreement should also follow the other relevant local laws. You should discuss them with any law advisor. Laws like foreclosure of the home or property, debt collection legal process and many more.

6. Minimization of Risk

The risk factor is the most painful and important part of any debt agreement. You should try to minimize the risk factor as much as possible. whether you are borrower or a lender. definitely loan brings the financial future of both lender and borrower at risk. Consider this factor too.

7. The Alternatives

Last but not the least, Alternative should always be in your mind. You should always have a solution if something goes against your expectation. If bank does not give you loan, you must have many other resources to get them.

I hope these little points will help you a lot if you are going to contract a family loan. whatever your position is as a borrower or as a lender.