Why borrowing from Banks is better than borrowing to people you know?

What comes in your mind when you hear the word, borrow, lend, loan? Have you ever tried to borrow something specially money from your neighbors? Why do you think it's better to borrow money from banks rather than people around you? Those are the questions that we gonna answer as we go deeper into this discussion. Borrowing or having loan is not new to my country-Philippines, the standard of living is expensive yet people can't afford to sustain their daily needs and necessities. It usually happens to people living at the poverty line, as we notice that inflation really hurts the economy of the world, the prices of goods are increase due to different circumstances, like in situation right now which the whole world got affected by the Russia-Ukraine War.

The importation and exportation of oil got affected since Russia is one of the country which had great oil reserved and due to sanctions and plan of the world to kill the economy of Russia by banning all the exportation came from Russia. Due to this the whole world got affected and the price of oil drastically increase, the most affected here are ordinary people, in my country oil is one the main source for business to operate. Lots of Filipinos are relying on crude and oil for their Vehicles to operate,due to increase of oil they don't have a choice but to increase the price of transportation fees, the business which relying on oil source also need to increase their prices, it's like a domino that continously affects many things. Consumers are greatly affected by this one, the wage is not enough to sustain daily needs like food, water, electricity, etc.

The money they earn from working whole day is not enough that's why people have no choice but to borrow money. For many Filipinos, they prefer to borrow money from people they know, their neighbors and even relatives with interest. The good side of borrowing money, there's no need lots of papers and contracts, if your neighbor lend you money then your lucky. However there are lots of downside of borrowing money from your neighbor. The first one is you are obliged to show debt of gratitude. I know there are times that we don't have any options but to borrow, no matter how we hold our principle that we shouldn't ask help to other people still the situation pushed us to do it. We are required to give debt of gratitude to those who help us which is good.

There are neighbors who doesn't want to add interest and they just want you to return ehat you borrowed if you have money already. However there are people who use the opportunity to take am advantage by adding interest on the amount you've borrowed. Another downside is if there's a conflict happened between you and the person you borrowed money the first thing they will say to you is you don't have debt of gratitude, they will start talking and throwing all the help they done to you, this is absurd since there are people which expecting a debt of gratitude from those people they helped. It's really not good idea to borrow money from people around you cause it can be a weapon that use against you once there's a dilemma happen.

That's the reason why it's better to borrow money from banks, I know it's a lot of paper works and transaction, atleast the bank will not remind you everyday to pay your debt. The good side of banks is there's a specific amount you can borrow and there's a specific date that you'll need to pay the whole loan you applied. It's also good to apply in loan having low interest so that it doesn't hurt your pocket. Atleast once you borrow money from banks it will deducted to your salary and less hassle unlike having a debt to your neighbor that reminding you every week about your debt. Banks also doesn't push you to have debt of gratitude since you applied for loan and you are responsible to pay for it. Business is business if you applied in banks rather than in people around you which taking it personally.