Borrowing money from family is absolutely possible and legal. Although it is easy to implement, there are a number of rules that must be followed by law and it is not without risks. This financing solution, far from being trivial, requires reflection in order to be confronted with other levers such as the grouping of credits , less subject to consequences for the balance of family relationships …

In what context do you borrow money from your family?

Are your ends of the month difficult and have you asked your parents or grandparents to help you? Even if it is completely authorized by the law, certain conditions must be respected. The family loan must include an interest rate, even a low one, and must be formalized in writing (under private seal or by notarial deed) above $ 1,500. This writing must indicate the amount of the loan, its repayment conditions and its duration. It must also be declared to the tax from an amount of 750 $. As for the lender, he must declare the interest he receives during his tax return.

The risks of a family loan

The first risk is fiscal: if the loan has not been declared to the taxes, the latter can consider that it is an income of undetermined origin or else of a disguised donation and claim transfer rights. Another risk is family: if no acknowledgment of debt has been signed, other children or grandchildren could feel disadvantaged and create a tense family climate.

Finally, if this loan helps you buy real estate, it can very well be included in the calculation of your debt level by the bank. This will further reduce your borrowing capacity, as you will see by performing your free credit buyback simulation online.

Buying back credit, a more serene solution

If you are facing recurring financial difficulties, buying credit is another lever to consider to find a breath in your budget. This solution allows you to combine several credits into one. Home loan, consumer credit, work loan and even bank overdraft can be the subject of a loan buy-back and be merged into a single monthly payment. This allows you to reduce your debt ratio, reduce your monthly expenses and find a balanced budget. And incidentally to stay on good terms with your family!