There is nothing new under the sun, so is loaning money to friends and family. Sometimes the economy seems unfavorable and we are left with no choice than to seek for financial help. It is not a bad thing to lend money to your friends or family members but one must do it the right way.
This article is here to guide you on how to lend money to friends and family. Below are four things to take into consideration before loaning your money. These things are very important and should not be taken for granted.
Lend Money only when you can
This is the number one rule to consider before opening your wallet. If you know that lending the money can affect you in a way, avoid doing it. You can turn it down by politely stating the reasons why you cannot help. You can say “I wish I could help but I am not financial stable right now,” or “I am sorry I wouldn’t be able to help because I have some bills to settle.”
Do not drain your wallet in order to please your friend or family, as this act might affect your finances and also destroy your relationship. Accept to loan your money only when you know you can.
Put your agreement down in black and white
Putting down your agreement in writing helps you to keep track of the due date for the payment of your loan. When this is done, the borrower takes the loan seriously and also endeavors to pay before or on the due date. You do not need an attorney general to do this; all you need is a document stating the loan amount, due date for payment, interest, penalty for late payment and any other agreement backed up with both parties’ signatures.
Loan what you can only afford to lose
If you lend money to a friend or family, ensure you give out an amount you can afford to lose. Sometimes things do not happen the way we plan them. Imagine a scenario whereby you loaned out an amount that you cannot afford to lose, what happens if the borrower fails to pay back the money? Such can jeopardize your relationship with the borrower, therefore do not loan what you cannot afford to lose.
Stick to the agreed due date for payment
Make sure you stick to the due date for payment; do not take your agreement for granted. Once the due date has passed without the payment of your loan, make sure your friend pays the penalty and also the loan. This will make your friend know that the agreement is really a serious one and should not be joked with.
Sometimes lending money to family or friends cannot be avoided; therefore it is advisable you apply the rules above so as to protect your relationships with friends and family.
Fumilola is a creative writer, skilled at writing informative and engaging articles. She has a Bsc. degree in Demography and Social Statistics. She spends her free time reading novels