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You’re Not Alone:
The Reality of Lending Between Family & Friends
Money has always been personal, and when life’s big moments come—buying a car, covering medical expenses, or starting a business—it’s often family and friends who step in to help. Our Community page is dedicated to showcasing just how common it is to borrow and lend within personal circles. From insightful statistics that highlight the size of this informal lending market to real-life stories from people just like you, this page helps shape the reality of financial support among loved ones.
Studies show that billions of dollars are exchanged annually between family and friends, proving that lending outside traditional banks isn’t just an occasional favor—it’s a significant part of how people navigate financial challenges. Whether you’ve borrowed money before or have been the one offering help, you’re part of a larger, trusted network of support. Explore the data, see the trends, and know that you’re not alone in making or receiving a loan from those who care.
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Did You Know?
>89 Billion
US Dollars
Over $89 billion is exchanged between family and friends in informal loans each year.
According to the Federal Reserve Board's Survey of Consumer Finances, loan transactions between friends and relatives amount to $89 billion annually in the United States.
43% of
Americans
43% of Americans have borrowed or lent money within their personal network.
A survey by LendingTree found that 43% of Americans have borrowed money from a family member or friend in the last five years, and 51% have loaned money to a family member or friend in the same period.
Top 10 Reasons
Borrowing money from family and friends is a common practice, often driven by various personal and financial needs. Here are the top 10 reasons individuals seek loans from their loved ones, along with relevant statistics.
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Unexpected costs such as medical bills, car repairs, or home emergencies can create an urgent need for funds. A survey found that 17% of individuals borrowed from friends and family to cover medical emergencies.
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Consolidating high-interest debts into a single, lower-interest loan from a trusted source can make repayments more manageable. Borrowing from friends to consolidate debt can significantly reduce borrowing costs by replacing high-interest obligations with a more manageable repayment structure.
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Entrepreneurs often turn to family and friends for initial capital before seeking external funding. More than a third of new businesses rely on loved ones for financial support.
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Covering tuition, student loan payments, or educational expenses that aren’t fully covered by financial aid can lead individuals to seek assistance from family or friends. Student loan refinancing is also a growing and trending strategy.
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Assistance with a down payment or temporary financial support during the home-buying process is common. Families are expected to provide a record $9.2 billion this year to help relatives purchase homes.
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Financial support during job loss or transitions between careers can help individuals manage their expenses until they secure new employment.
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Purchasing a vehicle or covering essential repairs to maintain transportation for work or daily needs often necessitates borrowing. Car repairs accounted for 15.9% of loan purposes among young borrowers. There is also a rising increase of privately refinancing vehicles for lower rates and more affordable payment options.
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Funding significant life events such as weddings or welcoming a new baby can require substantial financial outlays, leading individuals to seek loans from loved ones.
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Relocation expenses, including rent deposits, moving services, or temporary housing costs, can prompt individuals to borrow from family or friends.
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Covering healthcare expenses, therapy, or caregiving costs for children, elderly parents, or loved ones is a common reason for seeking financial assistance within personal networks.
Common Challenges
Awkwardness &
Strained Relationships
Lending money to family or friends can create tension, especially if repayment is delayed or expectations aren’t clear. Many fear that the loan could damage their relationship if things go wrong.
Unclear Terms
& Expectations
Without a formal agreement, misunderstandings can arise regarding repayment timelines, interest (if any), or whether the money is even expected to be paid back at all. This lack of clarity can lead to frustration or resentment.
Difficulty Asking
for Repayment
Unlike a bank, friends and family may struggle to enforce loan terms or remind the borrower to pay back the money, leading to stress and an awkward power dynamic.
Fear of
Non-Repayment
One of the biggest concerns is the possibility that the borrower simply won’t pay back the loan, whether due to financial struggles or a lack of urgency, leaving the lender feeling taken advantage of.
Unequal Financial
Power Dynamics
Lending money can shift the balance of a relationship, making one person feel indebted—not just financially but emotionally—leading to guilt, obligation, or resentment on either side.
Emotional Guilt
& Pressure
Borrowers often feel pressured to ask for help, while lenders may feel guilty if they can’t or don’t want to lend. Saying “no” to a loved one in need can feel just as difficult as lending money and not getting it back.
Wealth By Generation
Many young adults are struggling to navigate the high cost of living and the slow and delayed transfer of generational wealth. Over 80% of the wealth in the U.S. is belongs to Baby Boomers and Gen X, while Millennials have less than 10% of the total wealth. An increasing number of young adults are turning to parents and older family friends for informal, trust-based loans. Federal Reserve’s data from the final quarter of 2022 breakdown of generational wealth:
Rise of Informal Lending
The total U.S. market and practice of informal trust-based lending between family and friends are likely to rise significantly as inflation reduces consumer purchasing power and the cost of living increases. Additionally, financial institutions reducing their risk appetite and increasing their fees and rates will further drive the shift toward informal lending and informal refinancing.
*Quantifying the exact rise in personal lending between family and friends over time is challenging due to the informal nature of these transactions and limited comprehensive data. However, available studies provide insights into the prevalence and trends of such lending. The World Bank's Global Findex Database 2021 provides insights into informal financial practices, including borrowing from family and friends. According to the Federal Reserve Board's Survey of Consumer Finances, loan transactions between friends and relatives amount to approximately $89 billion annually in the United States as of 2012.
It’s actually bigger…
We should consider these questions alongside trends and projections to understand the scale and prevalence of informal trust-based lending.
How many informal loans are denied or never happen due to a lack of structure?
Many informal loans never happen due to a lack of structure, as lenders fear repayment issues and strained relationships. Without clear terms or accountability, trust-based lending feels too risky, leading to missed financial support opportunities. So the actual volume of loans could actually be significantly more.
Would there be more informal loans if there is structure to facilitate, track and manage these loans?
Yes, more informal loans would likely occur if there were a structured system to facilitate, track, and manage them. A clear framework with defined terms, repayment schedules, and accountability measures would help reduce the risks and uncertainties that often discourage lending between family and friends. Structure can provide transparency, build trust, and create a sense of security for both borrowers and lenders, making informal lending a more viable and widely accepted option.
How many people never ask for a loan because there’s no structure to support it?
Many people never ask for a loan from family or friends because there’s no clear structure to support it. Without defined terms, repayment plans, or a way to track the loan, the fear of misunderstandings, judgment, or strained relationships holds them back. A structured system could make these conversations easier, removing the awkwardness and uncertainty that often prevent people from seeking the help they need.
What no one talks about:
Borrowing money from family and friends can feel uncomfortable, creating unspoken tension, guilt, and the fear of being judged or seen differently.
It’s not just commonplace, It’s part of life.
You’re Not Alone
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