How to Borrow Money From Parents

by Laura Latzko
Contracts can provide legal documentation of loans between family members.

Contracts can provide legal documentation of loans between family members.

Moving out of your parents' house, when you get married, go to college or get a job, comes with added responsibilities. When you live on your own, you have to pay bills, a task that can be difficult when you are starting out. If you need to borrow money from your parents, do so in a way that shows that you have become a responsible adult.

Seek a loan from your parents only when you have exhausted other resources, such as bank loans or liquid assets. If you try to pay your bills with the money that you do have and still cannot make it, your parents will likely feel that you have attempted to solve your financial problem on your own before coming to them.

Negotiate how much money to borrow with your parents and try to come up with an amount that is feasible. Ask them for enough money to help you pay your bills but do not get greedy. You do not want to alienate your parents by asking them to lend you a large amount of money. Make sure you do not cause your parents financial problems because they have helped you.

Set firm boundaries when borrowing money from your parents. Let them know that even though they have lent you money, they cannot control important aspects of your life, such as where you live, who you spend time with or what you do in your leisure time.

Draw up a contract or promissory note with your parents to protect both parties and prove that you intend to pay them back. Within the contract or promissory note, establish when you will start paying the money back, how much you will pay back at a time and how long you will repay the money. Get a lawyer if you borrow a large sum of money of around $10,000 or more because she can help you to create a repayment schedule and figure out taxes.

Start to repay the loan from your parents as soon as possible. If you can, try to give them money back early, even if it is less than the amount designed in the contract, to show that you intend to honor your agreement. If you cannot pay money back on time or need to change the agreement to pay less at a time, ask to work out a new plan with your parents.

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Items you will need

  • Cash or check
  • Contract
  • Table
  • Pen


  • After you have borrowed money from your parents and paid them back, try to make sure that you will not have to get a loan again by saving money every week or month.
  • You will not have to pay a gift tax on the money that your parents loan you unless it goes over a certain amount, as designated by the federal government. In 2009, people could give a family member up to $13,000 in cash gifts, according to the Internal Revenue Service.


  • While some expenses, such as medical costs, are necessary, try to avoid maxing out your credit cards or spending all of the money in your banking or checking account on goods and services that you do not need. Consider making changes, such as moving to a different apartment or getting a cheaper vehicle, if you continually have problems with expenses.

About the Author

Laura Latzko is a freelance writer based in Phoenix, Ariz. She has reported for the "Columbia Missourian," "Columbia Daily Tribune," "Downtown Express" and "Washington Times." She holds a Master of Arts in journalism from the University of Missouri.

Photo Credits

  • signing a contract image by William Berry from Fotolia.com