Saying no to lending money to family and friends

Abigael

Valued Contributor
Family and friends seem to be the people who borrows you money the most. It is so hard to say no to them, they are your closest people. You would not want to let them down. But in some situations, lending them money only puts you in jeopardy because you have to stop your plans to satisfy their needs. Here are some instances when it becomes necessary to say no to lending your family or friends;

1. It is not an emergency.
It is so reasonable to help out a friend or family during a crisis, you know they would help you out too. But some cases are not an emergency. For example, you cannot stop your plans in order to lend money to your friend to buy a luxury car.

2. They never pay you back.
Especially if you are peers and each of you are earning money from jobs or investment. That person is so capable of paying you back the money they borrow. It is much better not to get paid back by your parent, but a sibling or friend who also works owes you the money they borrow, unless they are in a very bad place and you understand. So if they promise to pay back and they are capable and don't pay, you should stop lending them.
 

Holicent

VIP Contributor
You know your family, you know how they operate. You also know what they're capable of paying back and what they aren't. Before making an offer to loan someone money, consider these questions:

Does the borrower have a history of not paying back their debts? Do they have a history of borrowing from other people without repaying them?

Is it worth risking your own financial situation and peace of mind for this person? If you're on a tight budget, can you afford to lose any more money? If you're already in debt, can you afford to take on more?

What is the interest rate going to be if the borrower pays back with interest? If it's too high or if there's no interest rate at all, why would they pay you back when they don't have to pay anything at all?

Are there any other ways that they could get the money from another source without having to borrow from you? Could they sell some things off, or maybe borrow from someone else who has more money than you do?
 
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