Lending money to friends and family is not easy. Almost half of the Americans lending money to friends experienced a negative outcome. You may end up wrecking your relationship with your friend, and you may never get your money back. It happened to many of us. Your friend has to pay her mortgage and she asks for a quick loan. You give her the money she needs to pay off her mortgage, and you both agree on some repayment plan. However, your friend keeps coming up with one after another excuse and never gives you the money back. It's so common, and almost everybody could relate! What should you do if your friend wants to borrow money from you? Here’s what to do.
Do Not Give a 'Yes' Too Fast
Even though you are genuinely concerned about your friend’s problem, you should not say “yes” straight away when your friend approaches you. You should first know what led them to a point of no return. By collecting such crucial information, you would come to see if they will be able to repay the money to you, at least on their terms.
In many cases, people who borrow money from their friends could not return the money within the mutually agreed deadline just because they had no definite plans to repay their loans.
Don't Let Emotions Affect Your Decision.
Most of the time, people get emotional when they come to know about the financial problems of their friends. It's quite natural for you to get emotional when you first hear about financial difficulties. Don't get too moved by their words. For that matter, don't be too emotional when dealing with money. Remember that today's impulsive money decisions can bring about regrets tomorrow.
Check Reputation of Your Friend
You may know your friend very well, but chances are there that you never lent him money in the past. Therefore, you may not know how much commitment he will show when repaying the loans and mortgages. In such cases, you should not yield to the emotional pressure and lend your hard-earned money.
Instead, you should take some time and need to do proper research about him. You can take help from those people who have lent money to your friend before. They might be mutual friends, their relatives, colleagues, and even landlord. After doing such research, if you find that your friend is very much true to their words, you can help them financially. However, if you find that your friend has a history of missing out on due payments, you should practice caution and refuse them as politely as possible.
Get the Deal in Writing
You should check twice if you have your friend's commitment. If you find your friend is very much honest and committed too, you should not just have a verbal agreement and lend the money. Instead, you should get the deal in writing so as to avoid any conflict that might arise in the future. Anyone under the Sun can cheat you. At the end of the day, only you have to suffer because it's your money which is at stake.
You can take help from some of your mutual friends too. At the time of giving the money, you can keep your and his mutual friend as a witness of the fact that you have lent him a certain amount of money.
You should be aware of the fact that money can transform your relationship overnight. Whenever the money changes the hands, the relationship becomes sort of a business relationship. Most of the time, close friends take it easy and they don't even talk about it whenever they meet up or hang out together. But with time, if things don't go according to the plan or agreement, the situation may change dramatically and your friendship may take a hit. Trust issues often spoil relationships. It goes without saying that you should care for your friends and help them in all the way you can. However, when it comes to money, you should be cautious before taking any step and should let your brain take the decision, and not your heart.
