How to Arrange a Personal Loan From an Individual

Arranging for a personal loan from an individual may be the only way for some people to get the loan they need. Common people targeted for individual personal loans include family members and friends, though in some cases coworkers and business partners may be an appropriate choice. It is important to treat a personal loan from an individual as seriously as one from a lender, especially if there is a contract involved. The consequences of not paying a loan from a person can be just as severe as those of not paying back a company.

Ask only people you are certain have the money to loan. It can be potentially embarrassing and harmful to personal relationships to ask to borrow cash for a personal purpose from people who do not have enough money themselves.

Talk openly about why you want the loan and what it will be used for. Be willing to prove your ability to repay, such as through check stubs, just as you would with a traditional corporate lender.

Explain why you cannot get a loan from a bank, credit union or finance company. This may require you to disclose past hard times, such as personal bankruptcy. If you very recently had serious credit trouble, be able to explain why things have changed in your financial life.

Offer to sign a contract that says the person loaning you the money can sue you or garnish your wages if you do not pay back the loan.

Accept rejection politely, and move on to another person who might be more willing to lend you the money. You may also want to offer collateral to back any loan request.


  • Make the loan worthwhile to the lender. Include a reasonable interest rate in the loan's repayment.


  • Do not borrow money from someone if you are not sure you can repay. This at the very least can mess up a business or personal relationship.

About the Author

Stephanie Mojica has been a journalist since 1997 and currently works as a full-time reporter at the daily newspaper "The Advocate-Messenger" in Kentucky. Her articles have also appeared in newspapers such as "The Philadelphia Inquirer" and "The Virginian-Pilot," as well as several online publications. She holds a bachelor's degree from Athabasca University.