How to lend to family and friends

Few things can be more toxic to a close relationship than a loan. For both borrowers and lenders, this is how to avoid the pitfalls.

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Sep 28, 2012 8:58PM
Just say no.  "Lending" money to friends or family rarely ends well.  One of the parties will be insulted if a formal written agreement is requested.  If  their is no written agreement, re-payment, if it happens, can be painfully slow and infrequent.  If their is a written agreement and it's terms are not met-can you take that friend or family member to court?
They may be mad for a while when you say , "No, why don't you go to a bank."  That is far better than a lifetime of regret.
Oct 4, 2012 8:15PM
When I first got married many years ago,my inlaws gave me and my wife a gift of money and told us it was a gift not a loan. After many years of marriage and my father in law dead, I returned the gift plus interest because my mother in law dont have that much to live on, much like us when we first were married. It helped us get started and we returned the favor when she needed it.
Oct 1, 2012 6:32AM

my sister woke me up early one sat morning she wanted to get this great deal on a computer they were selling on QVC.  She did not have a credit card to put the purchase on .  It was $1600.00 with lots of apps and rebates of $500.  I had just gotten a brand new Chase card, nothing on it.  I charged the computer on that card.  Gave her the credit card account number and where to mail in the payments and forgot about it.


Two months later open the mail no payment.  I called her up and asked why.  "Just haven't had time, sorry, I will get that in the mail".  Another month goes by next bill, no payment.  To this day my sister never mentions that loan.  She never made one payment and I never asked her about it.  It took me two years to pay off the card.  I later found out she received over $500 in rebates and never sent me one dime.    To this day she never said why she didn't pay it, and I never asked.  I just don't loan money to family members anymore.



Oct 4, 2012 8:09PM
I remember when i was in my early 20's, out of work and i asked my oldest sister for some money, and she told me "NO", i think that was the best thing she ever told me, because now, i just turned 62 years old, receiving a pension, will be collecting my SS in December, and i have over $335,000. invested in the market.  My sister is no longer living now, but, i can tell her....".Thank you for telling me "No", you made me a better person for myself, where i never had to depend on anyone but myself for survival.   Thank you again sis.
Oct 4, 2012 4:56PM
Most of these posts address parents loaning money to their kids. In my case, my daughter has covered some of my expenses. I am on social security disability and some months it is hard for me to pay for what I need. She has told me many times this is her way of paying me back for helping her through college.
Oct 4, 2012 8:35PM
I quit lending money to family and friends a long time ago when I realized it was making them sick with amnesia !
Oct 4, 2012 5:45PM
I disagree with most of these posts. My exhusband screwed up my credit and there were a few months where I had trouble paying his debt that I inherited. My family loaned me money. I insisted on adding interest and have made regular payments ever since. I still owe a bit, but I pay it down every months with what I have. I skip out on dinners out, new phones/computers, new clothes, etc because my first obligation after paying current bills is to pay back what I borrowed.
Oct 4, 2012 5:26PM
I loaned my only sibling $15K that I had worked my a$$ off for. It was for business, not personal. The business closed, equipment sold, my sib moved on to the next chapter. It's been at least 5 years since the original loan, I've never seen a dime.  Sorry to say, I DID expect repayment, still do. Not talking about it doesn't make it go away. My sib never mentions it. It is causing bad blood between us. Funny thing is, this same sib gave me advice many years ago: "don't lend money to family" ... I should have listened!
Oct 4, 2012 7:40PM
I've made it a rule that I don't lend money to family or close friends. If I can afford to give it to them as a gift I do so and totally forget about it the moment I've given the money away. If I can't afford to give it to them as a gift I don't loan it. Relationships with family and close friends are not worth being ruined because of money. 
Oct 4, 2012 8:21PM
Lending money to family and friends is not a good idea.  99% of the time you will never get paid back.  If I were wealthy, it would not make any difference to me because I would give the money, not loan the money.  But since I am not rich, many times doing without because I have loaned money and never been repaid, I wouldn't do it any more.  My grandmother told me the any money you earn and get is not yours until all your bills are paid and what you owe is paid back.  Whatever is left is then yours.  I know of people who have borrowed money from others, and then have gone on vacation without paying back the person from whom they borrowed months before.  When I was a kid, I borrowed $5.00 from my brother and asked him to remind me to pay him back.  He told me that it was not his responsibility to remind me, it was my responsibility to remember and pay him back. 

Sep 28, 2012 9:16PM
I have a better idea: Don't lend money to family members or friends... give them money if you can afford it and if you are not enabling a bad habit or behavior (drug use, chronic overspending, or some other problem).
Oct 4, 2012 8:20PM
Another very important thing to think about: NEVER cosign for anything. My then boyfriend talked me into cosigning for his cellphone so he would'nt have to make a $500.00 deposit. Boy did I regret that. He went over his minutes never made a single payment so they shut off his phone and my phone until I paid them $800.00 which was his 2 months unpaid phone usage and the rest of his contract which they cancelled it but I had to pay since I cosigned. NEVER again..
Oct 1, 2012 10:04AM
How to lend to theses people:  you don't.
Oct 1, 2012 7:25AM

If you lend to family and friends,.....never expect to get it back,....when it is paid back it is nice and when it isn't,.....well, maybe someday,.....but NEVER charg interest to family or friends.

Oct 4, 2012 8:19PM
The old saying goes: Help a man in need and he will remember you the next time he is in need. 

No rest for the righteous! ha!
Sep 30, 2012 8:32PM
If you are not in the business of lending money (I'd guess most of us aren't banks), you have no business lending money.  Agree with the first point - if you part with money, consider it gone.  Never part with what you can't do without.
Oct 4, 2012 7:52PM

My son lost his job and has lived with me for a year. He was collecting unemployment and working odd ball jobs. I did not request any rent, but when he landed a big job, he was still at home with me. When I told him he had to start paying rent - and it was not much, just 400/month, he moved out. Bwaaahhh!


Now I got my old bedroom back, so all my junk in the garage can go back in it. LOL.

Oct 4, 2012 7:58PM
My rule is if the bank won't lend it to you, i won't either.
Oct 4, 2012 7:01PM
People are constantly suing people on Judge Judy because of loans. What always amazes me is that the people who "borrowed" the money often seem to think the lender doesn't need to get it back because they were in a good position to lend it to them in the first place. They don't even show appreciation! Speaking of Judge Judy, she's on now!
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