Should You Lend Your Friend Money?
When you find yourself in a financial bind, it is very difficult to get around it especially if you do not have funds to pay these bills. Some would go to a bank to get a personal loan, while others will approach moneylenders if the banks decline their applications.
For others, they would go to their friends to seek financial assistance to bypass the documentary requirements in availing a loan and the waiting time that goes with it. If the friend is close to the person, they will lend a hand when they could.
However, it is not often they will aid these friends, especially if they have been borrowing money often. If they borrow hundreds and thousands of dollars and not pay it immediately, the idea of lending further is out of the question.
Unfortunately, even if we say no, our friends would use our emotions and trust in them to make us lend them money. When they fail to pay us on time, not only will we find it difficult to catch them, it breaks the trust you have built for years.
So, before you lose a friend because of a money dispute, here are some tips you can consider when your friend approaches you about borrowing money:
Ask yourself if your friendship is strong enough
Before you consider allowing your friend to borrow from you, consider how strong your friendship is. If your friendship is strong enough and your friend is trustworthy, you can consider lending them some money.
Do not feel pressured or guilty if they keep pressing you to lend them cash or if you declined their request. You have the right to deny their request. Give them your reasons for not lending them money and they will understand if they are your true friend.
Offer an alternative
If you are not really close to the person borrowing money from you, you can help them with alternative solutions to help them with their plight. You can recommend to them a trustworthy moneylender in the country who can lend them the money in a short period of time through personal loans.
Moneylenders can process personal loan applications in a short period of time and they do not require a lot of documents to consider your loan applications. If they are having problems with their applications, assist them as best as you can.
Check your budget if you can lend money
If you really want to help your friend, you need to consider if you have the funds to help them out. If you have problems with your own finances, do not force yourself to lend them the money you have because you may end up having problems when you need to pay your own bills. Always consider yourself first before you lend funds.
When your budget is stable and you can spare a few extra bucks, you can lend it over. Just make sure that you budget your funds accordingly so even if you lend your spare money, you won’t be worrying when you find yourself short.
Assess your friend’s capacity to pay you back
Even if your friend is trustworthy, it is a possibility that they may not be able to pay you back on time. While slight delays on the payment are alright, the important thing you need to think about is if they have the capacity to pay you off in the first place.
If they have loans they managed to pay back, it will be able to calm you down since you know they will pay you back on time. However, if your friend has a habit of not paying back the debts they have to others, it is a cause for concern. Where will your friend get the money to pay you back? It is possible you will not see your money anymore especially if the problem is serious.
Before you decide if you will lend them money or not, speak to your friend and find out about their plight. Know how long will they pay their loan from you and how they will pay you back. If your friend has a bad history, say no if they will borrow from you since the risk is too high.
Consider the possibilities when your friend doesn’t pay you back
When you already considered your friend’s capability to pay you off, it is time to consider what will happen if the money is lost to you entirely. Be realistic as to these possible scenarios and be prepared when it does happen to you. Do you see yourself falling short of your budget for the money? Will this break your friendship?
The status of your friendship with your friend who borrowed from you is likely to change if they failed to pay you. It is possible you may call off your friendship because your friend placed you in a financial bind as well.
If you find your budget still on a green even if your friend hasn’t paid you up, your friendship may not change at all. This will show that you value your friendship rather than the money they failed to pay you.
Find out why they need the money
Of course, before making that decision to lend money, find out why they need the money.
Will they need it for a medical emergency?
Do they need to pay their school bills or overdue bills? While it is also ok not to ask about their reasons for borrowing if the issue is too personal, having an idea where the money would go can put your mind at ease.
When a friend approaches you and asks if you can lend them money, it is not bad to decline their request. You have to consider that you also have to pay for your expenses and the money can go to your other needs. You also have to consider all the possibilities when you do lend your friend some money because it may cause problems not just for your budget, but also with your friends.