Do you lend money to close friends or relatives?

[einar]

Pretty strong odds that you are aiming to lose both money *and* a friendship. If you are the sort of fellow who has trouble saying no, just offer your friend a gift of whatever amount makes you feel comfortable. Or least uncomfortable. Maybe $500, maybe $1000. Not more. IOW, skip the loan idea altogether and gift him a small amount of money.

If he values your friendship as much as you value his, he really should be touched by the offer but turn you down. Or you could raise this uncomfortable issue in front of his wife, and see what she says.

 

[freestuff]

No -- since you'll never get it back.

 

[djk]

No.

No good deed goes unpunished. A lot of the replies in this thread back this up unfortunately.

My friend of over 20 years has been subtly hinting at me about lending money to him. He has a kid coming next month and his wife will be taking mat leave. He already has a mortgage, one kid(so new one will be two in total), and just bought a new mini SUV.

I moved back home so I don't have any debts and saved up some money because I don't have a mortgage or kids. He knows I have some cash but while he hasn't outright asked me for money there have been some comments about being broke and other references about being low on cash and he 'knows' I'll be there for him in the future if he really needs it.

The thing is I don't make great money but saved over the years because no debt/no wife/no kids. Should I break the friendship because I think he will eventually ask for a loan as his kids get older and the expenses mount up. He also wishes to buy a bigger place. I don't like to lend money to anyone unless it's a close blood relative.

 

[jetaudio789]

of course yes.

 

[canonabcde]

For my family members, I love them so much. So I will give to them for free. They don’t have to ask for help, it is my responsibility to help them. Like my youngest sister, she is a university student and living with me. I take care of her. All her expenses are on me; even she has a part time job.
For my best friends, of course I will give them money to help them out. I don’t really expect it to be repaid because I treat them as my family members. I have only one best friend in my life.
For other peoples, I am willing to help if they need and I will try my very best to help them. Because I strongly believe in this quote “Real Happiness is Found in Helping Others”

 

[The Oracle]

I never lend money unless I receive collateral back in return.

Usually the collateral has to be at least double the value of the money.

Sounds harsh but that way I never get screwed.

 

[fuji]

I never lend money unless I receive collateral back in return.

Usually the collateral has to be at least double the value of the money.

Sounds harsh but that way I never get screwed.

You do this with your FRIENDS? And they stay friends with you?

If my friends ask me for money as I mentioned I have one of two answers, depending on the friend and the amount:

1) Sorry no can do, it's not all sunshine and roses over here either buddy, or

2) Look if you need it I'll give it to you, here, take it, don't pay me back, just return the favour some day

I never lend money to friends, though I might give, and I sure as hell wouldn't demand collateral from a friend.

 

[Mia.Colpa]

You do this with your FRIENDS? And they stay friends with you?

Absolutely, that's how we remain frends, there is no grey area, it's quite clear, collateral and documeted, period. I've lent money to family, friends, etc.., including parents, brothers, and all with collateral and documnted and all paid back, been doing it for 30 years, never had a problem. I've got to laugh at all the posters who say no way because they got burnt, didn't do it right in the first place.

Sometimes friends and family need a hand and can't get a loan from a bank, that's where I can help, but I cross my t's and dot my i's. It's not like giving them the money in a bread basket.

 

[The Oracle]

You do this with your FRIENDS? And they stay friends with you?

Yep they stay friends with me.

This way if there are unforeseen circumstances that arrive and they can't pay me then it's my option as to whether to give back the collateral or take possession of it until the debt is paid off.

 

[TorontoTL]

I wouldn't lend it but that is coming from personal experience. If he was smart enough, he wouldn't be going out and buying a brand new suv if he was strapped for cash. One of my friend owes me almost $25,000 and it's going to come up to 3 years now and guess what, I haven't seen a single dime yet.

He is in the exact same shoes as your friend except he doesn't have a wife or kids. What he does have is a house with mortgage and a suv he bought brand new two years ago while he still owed me money. I gave him the benefit of doubt that he'll pay me back eventually but after 3 years, nothings really changed except our friendship going downhill.

So think twice if you really want to depart with your money. Friends feel like they are entitled to something of yours especially when they have it in their possession. I wouldn't lend it in your situation considering you are putting the question out there already which means you already have doubt if your friend can pay you back or not. I'd just tell him to sell his suv or return and stop making payments for it, that'll save him on insurance and his monthly payments because I'm sure he didn't just go out and spend $40,000+ cash on a car.

 

[Cycleguy007]

Rarely do my family and friends require it, but if they did... sure. Why not?

It is more often that they have a need for my time, at which point, I am always ready, willing and able to help out.

 

[Yoga Face]

I have a contract written so it is clear what went down

 

[Anynym]

I would ask two questions: first, am I in a position to help? And then, what is the nature of the help that I'm offering: is this a temporary problem that will be solved with a bit of cash, or is it a long-term problem for which a loan will only add to the pain down the road?

The OP described circumstances which sound like a systemic cash management problem, and adding to later debt payments might not be doing the friend any favours. Especially if there are spending choices which might not be made within a budget.

I would suggest that it is more helpful to accept that your friend doesn't have cash to spend and as you spend time together find activities which don't cost anything - or at least cost a lot less than you're both used to spending. If you're used to getting together for a couple beers every week, suggest meeting for coffee instead. Don't suggest plans which could leave him needing a babysitter, or which could exclude him if unless he coughs up his share of the bill.

 

[Mr. Lucky]

No! never again

 

[Fozzie]

I would be very hesitant to lend money to a friend

 

[roblestone]

Don't loan him any more than you are afraid of losing. It's human nature to forget money you have borrowed and never to forget an unpaid loan. If you loan him a small amount that doesn't hurt you then if he ever asks again you can say "You never paid me back the last time."

 

[Nickelodeon]

I think you be very up front and say that you're worried this will put your friendship at risk. If he has no financial plan that includes a payback for you, you will will friend and money.

 

[KBear]

Sounds like your friend has a spending problem, and you will be adding to his problem by supplying more cash. At some point he will run out of cash and credit, and it might as well be before you lend him the money as after. If you lend him the money you will lose your friend and cash. If he cant get the money from the bank, then he is a bad risk.

Could tell him you can’t lend the money out as you are saving to buy a new car. He should understand as he just bought the SUV. Or tie the money up somehow as was suggested.

 

[TPO]

I have given money to friend but I never lend. My expectation is to never get it back in these particular cases. Lending complicates things and more often than not you are let down by YOUR FRIEND.

If you give don't expect it back. When it does come back, you know you have a true friend.

 

[Berlin]

No

I agree with all the " no " posters and their " give what you deem is fair and never loan " comments.

To OP:

Learn to say "NO" . It is not easy and takes time, but you are gonna save yourself tons of frustrations in the long run. Real friendships will always stay regardless .