No matter how your relationships are, money can destroy them. When your friend asks to borrow some money from you and ensures you to pay it back ASAP, you certainly want to help. But are you sure that it’s not the end of your friendship? Remember these 6 rules when you lend money to a friend.
Discuss other options.
Money is not always the way to get out of the problem. So instead of lending money you can ask your friend, whether you can help to deal with the problem.
Lend the sum that you can afford to lose.
Even your dearest friends can fool you and never give your money back. No matter how much you love and trust your friend, and how much you want to help them, never lend the sum that will undermine your financial situation. If you’re OK to lose $1,000, you can give it to your friend. But if it’s everything you’ve got, then think about taking care of yourself before lending money.
Deal with cash only.
Opening a credit card in your name so your friend could use it or requesting to co-sign for a loan can put you in a position, when someone’s actions affect your credit history. Shut down any of such schemes as soon as possible, and if you lend money, then deal with cash only.
Find out all the details.
You have the right to know why your friend needs the money. No one will give the money blindly! So if you get no response why your friend needs money, you’d better stay away from the deal.
Discuss the interest.
It may be awkward to talk about the interest, but if your friend asks to lend them money for several months, you really need it. It’s not for your profit, you will just make sure that your friend is also interested in paying you back ASAP.
Consider the impact.
Think, if you lose your money, will you still be able to save your friendship? In case you’re not sure about it, then either say “No” or think about giving the money, not lending it. If you give your friend the money and never ask for them back, your friendship won’t be under the stress of unpaid debts. You’ve just helped your friend for your friendship’s sake.