There is no doubt that friends and family members are supposed to help each other in difficult times. However, when it comes to lending money to a friend or family member, you need to think wisely as it can get you into a lot. Here are a few tips you must keep in mind when lending money to a friend or family member.
Analyze the weight of repayments
Sometimes, friends or family members may ask you for help instead of going to a financial institution. In this situation, you must carefully decide whether you should go for prompt payments or intermittent payments. Most of the times, the weaker credit history is the primary element that forces the individual to approach you instead of going to a financial institute.
It means that he might not be able to pay off the debt. So, avoid getting emotional and carefully analyze the weight of loan repayments before lending them the money.
Do Not Think Of Getting Anything In Return
You might be losing your respect if you are expecting something in return. There is no doubt that the other person is responsible for paying off the money they’ve lent from you. However, if you’re expecting something more than what you have agreed upon, you’re feeling disappointed. It’s completely unfair if you’re expecting something in return from a friend or family member.
Don’t Forget to Write it Down
If you’re strict on full repayment or realizing a huge amount of money, you must write it down. This agreement is called a promissory note, and you can mention all the terms and conditions of the loan in this agreement. Both the parties and a reputable lawyer must sign this promissory note. Thus, you can make use of this legal agreement if the need arises. Before you hand over the money to the individual, you must document the entire process.
Don’t be afraid of saying “NO!”
There is no doubt that you’ve earned money with a lot of efforts and hard work. You can refuse to pay the loan if you’re feeling uncomfortable. Make sure that you maturely discuss the matter and try to convince them that your financial conditions are making it difficult for you to lend them the money. The other person should understand your situation. If they do not believe you, you may be better off without them.
Gently Remind Them About Repayments
You are definitely not willing to ruin your relationship with the borrower. So, you must gently remind them about the repayments instead of throwing direct questions at them. You must try to cultivate a smoother discussion instead of threatening or interrogating them about repayment.