Most consumer advocates say that one of the biggest financial mistakes that one can make is borrowing money from or loaning money to a close friend or a family member. Fortunately, most of us can now avoid this awkward situation by making use of the fledgling peer to peer lending industry.

When you borrow money from or loan money to someone close to you, sometimes the process will work out fine. In the situation that the borrower can’t repay his or her bill, which is often the case, your relationship with the person on the other side of the transaction is almost always soured. If you’re loaning money to a family member or borrowing money from a family member, it’s likely because you may not have been able to get a loan from the bank due to your credit or because of the tight credit situation in the financial markets.

Borrowing money from a friend or family member changes the relationship dynamic from father/daughter or brother/sister to borrower or lender. Radio host Dave Ramsey frequently says that when you borrow money from a friend or family member, they become your master and you become their servant, referencing the passage of Christian scripture which says “The borrower is servant to the lender.”

There’s so much that can go wrong when making these types of financial transactions with friends or family. The lender might start placing a closer eye on the borrower’s spending patterns. You might start avoiding your family members if the deal goes sour or you could find yourself upset at someone that owes you money. Eventually the relationship will suffer and loaning money from or borrowing money to family members should just be avoided.

Fortunately, there’s another option for borrowers to take out loans that isn’t via a credit card or getting a loan from a family member. Instead, get a personal loan from your bank or a peer to peer lending site such as Lending Club or Prosper.com. You’ll be able to get a better interest rate than you would from a bank and your relationship with your family won’t be in danger.