10 reasons to think twice before lending money
While no one ever wants to say, “no” to a friend or family member in need, it’s important to make sure you are lending your money for the right reasons.
We’re going to look at 10 reasons you should think twice before lending money to friends or family. By considering these different factors you could not only save yourself a great deal of money, but something ultimately more important, your relationship.
1. Personal loans can be vague
The informal nature of personal loans can lead to inconsistencies in expectations regarding repayment obligations, which can ultimately lead to conflict.
2. Loan may not be prioritised
An informal loan doesn’t have the fear factor associated with other types of loans, which could make the person borrowing money more inclined to skip repayments.
3. Chasing the borrower can be awkward
Because this person is close to up, the act of chasing up late repayments can become quite awkward and lead to communication breakdowns that damage relationships.
4. Make events and social gatherings awkward
You never want to feel as though your presence at a social event is making other people feel awkward, but money can make people do strange things.
5. Changes the relationship
Even if you’re taking care to make sure all repayments are being met, there’s just something about going into debt to a family member that changes the relationship.
6. The borrower may ask for more
Once you’ve already lent the first sum, there’s no stopping them from asking for more, and more to the point where you’ve given more than you can afford to do so.
7. You’re enabling, not helping
Consider this – when you lend to a friend or family member you’re giving them an easy way out, rather than helping them find an alternative solution to their problems.
8. These type of loans don’t earn interest
Loaning to friends and family ultimately costs you money and unless you’re going through the complex mechanism of charging interest there’s little in it for you.
9. You might need the money yourself
While you might be in a position to lend money now, who knows what’s just around the corner? Not receiving repayments can spell financial disaster for your family.
10. You could lose money and a relationship
Ultimately not getting your money back is a disaster, but what’s even worse is the possibility that you may also lose someone who’s very close to you due to tension.
Have you ever lent money to a friend or family member? If so, how did you feel it went? Do you think it was successful, or did you regret the move?
Let us know in the comment section.
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