How to be Safe When Giving Loan to Family and Friends

[Jasz]

Many people have a hard time saying no to a friend or family member who asks for a loan. And sometimes it's hard to say no because there's no good reason why you shouldn't lend the money.

The problem is that lending money can be risky, especially if you aren't able to get it back. If you are just one of many lenders, then you may not know who will pay back the loan and who will default on the loan.

The best way to deal with this dilemma is by having a set of rules that you follow when deciding whether or not to lend money. Here are some tips for making sure your decision-making process is both fair and effective:

Write down your rules before making any decisions about lending money; don't rely on memory alone.

Don't make exceptions unless there is a good reason — and even then, be careful! Exceptions can easily become the norm if they aren't carefully controlled.

Remember that some people are better at paying back loans than others; don't lend money just because they ask — that's how credit card debt typically starts.

 

[bongoly]

it's quite a tough decision to make when dealing with family in respect to money issues, I strongly agree with your opinions about lending money to friends and family.

 

[Holicent]

You might think that your family and friends are safe, but they're not. There are lots of situations where you can get into debt with someone you trust.

Here's how to be safe when giving a loan to family and friends:

Set a limit on what you're willing to lend. Put down an amount that you know will not cause trouble for them if they need it. For example, if your friend is in situation that requires financial help but also has a credit card debt, putting down a certain number will help prevent that from happening again.

Check their credit report before making any loans. If they don't have anything on their report or if it was recently opened because their credit score was low at one point, then don't make the loan.

Make sure they understand your terms and conditions before borrowing money from them. Make sure they understand exactly how much interest will be charged on the loan (and how often, if any) as well as how long the loan will last (for instance, six months or 12 months).

 

[Ayuba Ernest]

When loaning money to friends and family, it is important to follow some basic safety measures to protect yourself and your money. First, only loan an amount of money that you can afford to lose. It is important to remember that you may never get the money back, so only loan what you can afford to part with.

Second, make sure to get the loan agreement in writing. This will help to ensure that there is a clear understanding between you and the borrower about the terms of the loan. This agreement should include the repayment schedule, the interest rate (if any), and any other relevant terms.

Third, consider using a collateralized loan. This type of loan uses an asset, such as a car or a house, as collateral. This way, if the borrower fails to repay the loan, you can seize the collateral to recoup your losses. Finally, consider using a cosigner to increase your chances of getting the loan repaid. By having someone else responsible for repaying the loan, you can minimize your own risk.