Occasionally, families need money to make larger purchases and family loans help them get the money they need. As long as you can prove that you are able to pay back a family loan, you should qualify. However, companies base the interest rates on your credit score. The higher your credit score, the lower rate you can get.

You can use family loan providers to:

1. Pay for a large expense such as a car or home. These things are practically a necessity, but few people have the cash-on-hand to make such a large purchase. Family home loans help give families a safe place to live.

2. Get an education. The cost of a good education is always increasing. With family education loans, you can be sure that your children get the best education possible.

3. Reduce and eliminate your debt. If you've let your debt get out of control, you could have a hard time paying it off, particularly if you have a high interest rate. A family loan company may be able to consolidate your debt and allow you to repay with a lower interest rate. This way, you are able to pay off your debt in a more timely fashion.

Action Steps
The best contacts and resources to help you get it done

Take out family loans to pay for your child's education

A college education doesn't have to be expensive. All schools help design a financial aid package that works for you. However, if you still need some money, you can often take out low interest federal family education loans.

I recommend: Students can take out Stafford Loans, which they don't have to repay until they have graduated from college. Your college's financial aid department can help you apply. If parents need a loan to help pay for their child's education, they can get a loan through the Federal PLUS Loan Program. These loans often have a lower interest rate than typical bank loans.

Take out family home loans to purchase a house

Almost every family dreams of owning their own home. Home loans make this possible. There are loans to suit every type of family.

I recommend: Most families turn to a well-known bank, such as Washington Mutual for their home loans. Other families prefer to do business in certain niches. For example, you can get Christian family loans through Blue Knight Funding.

Consolidate your debt with family loans

Debt can be crushing and it's hard to get out of debt if you have high interest rates and can only make the minimum payment. A consolidation loan may be what you need if you are ready to get out of debt.

I recommend: Look for a debt consolidation loan from Wells Fargo. Alternatively, a family member may be able to loan you money to help get out of debt. You can protect their interests by using a peer-to-peer lending site such as Virgin Money.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Make sure that you study all the information about family loans you have before signing an agreement. This ensures that you understand the terms of the loan and that there are no surprise fees.