Family and friends are one of the most important relationships in our lives, so it’s no wonder that when a close friend or family member asks you to lend him money, you want to do it without hesitation because you want to help. However, lending money to relatives and friends may not be such a good idea, because debt repayment may not always be a successful and quick process, which can result in losing both your loan money and your relationship with the person you are lending the money to.
Lending money to a family member or friend can lead to a number of unexpected problems
So it is worth considering some of the reasons why you should not lend money to a close friend or relative.
One of the most common problems with loans to people close to you is that they do not feel they should be repaid as soon as possible. A person who borrows from relatives or friends often thinks that because they are not borrowing from the bank or taking short-term loans with a negative credit history, they can delay debt repayment because they do not have to pay interest. But the reality is that even when borrowing from people close to you, you should try to repay that debt as quickly as possible, because the person you borrowed from might suddenly need that amount. You may be thinking – if he needs the money I borrowed, he will ask me to give him a debt, but actually asking a family or friend to repay the loan is very difficult because this type of conversation is always uncomfortable and unpleasant. The best strategy in this case, if you decide to lend money or borrow money from your family or friends, is to set a specific time frame and format for how the money will be repaid, so that neither party will feel uncomfortable and will still be able to maintain good relationship, despite borrowing.
Another problem anyone can face in such a situation is that the person who borrows money may feel as if he is the servant of the person who lent him the money. It may seem to the borrower that he has to satisfy every lender’s desire, which can lead to problems in the relationship or even the disappearance of that relationship. In this case, the lender should clearly agree on the terms of the loan and possibly make some informal paper, albeit just to make it clear to both sides how this situation works. Also, the lender should make it clear that the fact that they lend money does not immediately mean that their relationship is changing or that they become superior to their friend or relative. In this way it would be possible to appreciate the unpleasant loan negotiations and to avoid relationship problems.
It may happen that the borrower starts to use his or her favor to ask for more money
But since both the lender and the borrower are friends or relatives, the lender may seem to have no choice and still have to lend money. Not only can this situation create financial problems for you, but it can also bring an end to your relationship. Therefore, it is important not to give in or lend money before your previous debt is repaid, as only this will enable you to show your position clearly and not go into your own debt.
If you decide to lend money to a relative or friend
however, it is first of all worth not only inquiring about who needs the money, but also clearly setting out your loan terms and writing down your settings, even having the borrower sign the paper. The question of how the money will be spent will help you understand whether it is safe to lend it to your friend or relative, because you never know if he or she does not need the money to pay off other debts or a bad habit until you ask. But negotiation, clear debt repayment, and engraving these terms on paper will help both parties not to go off the road while repaying the loan, as well as maintain friendships or family ties.