Crucial insights in friendly loans, a guide to lending money to a friend, relatives and family members
Sometimes, we face uptight situations where we are left with our minds blank and clueless of the right move to do. Say if your close friend or a relative asks you a favor to lend them sum of money for their financial troubles. Unless you have a “magic tree” that infinitely bears money, saying “YES” to them might probably never become a hard word to utter. But admit the fact that you’re also among those who struggle for a living – one among millions who treat their hard-earned money with utmost value.
But if your mind is still clouded with conflicting thoughts and you just feel the urge to open up both your heart and your wallet all at the same time, then maybe, you can consider these insights before you extend your assistance to them.
Give a word of advice
Lending money to a friend or relative, in whatever angle you may view, is a risk that you need to carefully consider. Some might view it at the wrong side of the equation if one easily lends his money to a friend or relative who’s financially compromised. As much as possible, you should discuss with him the grounds that both of you are to take especially in cases where money is involved, you risk not only losing the money you can’t afford to lose but far more than that, you as well risk losing the good relationship that you have established with one another. Talk to him promptly that once both of you are engaged into this kind of arrangement, everything must be settled accordingly bearing in mind all the responsibilities and conditions that you two have to consider. Advice him of his future course of actions towards his problem and if applicable, give him possible options or alternatives to counter the financial difficulty he’s currently experiencing.
Pen and paper might be helpful
If you decide to lend your money to a friend, then set your rules. Don’t hesitate to make your own terms and conditions against the loan; you are the lender in the first place so you have the authority over certain conditions that must govern while you are engaged in this deal. Draft the repayment schemes, define your timeline of repayment, give the other details of the loan and if necessary, have it signed and notarized. This way, both of you are secured not only in a handshake agreement but also you’re bound with legalities that can make the deal appear legit.
There will come a time that either you or your friend will experience a run of bad things. It might be him not being able to repay on the agreed terms or it’s you who might eventually need the money you just lend to your friend. Don’t act possessively in handling this situation. First, consider the amount of money that you can only provide – that means that you must have beforehand anticipated that if things go roughly along the way, you’ll have a back up mechanism to your personal financial mishap. Talk to him head-on, confront him and give him time to explain his side why he failed to follow the conditions. Understand his situation and re-define the payment scheme if he really can’t afford to repay you based on your previous agreement. A little adjustment can help you retain your friendship while still dealing with the loan in a business manner.
If appropriate, learn to say “No”
There are cases when saying “No” is just needed to put everything in place. You should remember that once you lend money to a friend, you are giving him already the wick to flare up an open-end transaction. It means that you will become his eventual resource where he can borrow money from every time he falls short of it. This will never become an issue only if he is responsible of his financial duties. But if he isn’t, and you think he is just taking advantage of you, then it’s time for you to say “No”. This does not mean however that you dodge him for good. Perhaps, you can try helping him in other way. You can give him tips on how he can manage well his finances by having an effective budget scheme that may practically shape up his financial well-being.
With these great tips in mind, perhaps, you’ll be able to arrive at the best decision whether or not you will lend your precious money to your friends or relatives. But at some point, everything will just boil down in just one solution and that is very dependent on how you take the situations.