Summary: Check out these practical tips when you are about to lend cash to your Family Loans members or friends.
7 Practical Tips When Lending Money to Your Loved Ones
Even if it is not advisable, lending money to Family Loans or friends can be done but it is always a touchy subject. Sure, you want to help them financially, but think twice before doing it. We are willing of loaning them when they are in need.
The situation can be a bad idea because sooner or later it may jeopardize your relationship with them especially when repayment had not be done dutifully. So, what are you going to do when you need to lend them your hard earned money?
Below are some practical suggestions you should take before doing cash loans to your loved ones:
Find out if you can afford Family Loans lend
At some point, we became a “yes” person without thinking twice. When lending money, consider what you have or the amount of cash you got on hand. Do not pressure yourself to say yes right away. If you have extra money that you would not need right away, then you can lend some. But if it is an emergency, think twice.
Lend only the amount you are willing to lose
It will always be a gamble to lend money to friends and family members. Do not treat the borrowed money as a gift just because they are your family or someone really close to you. If lending them money is inevitable, do not give in to the amount they are asking; instead, let them borrow the amount that you really can afford to lose.
Lend cash only
You should only lend cold cash and not anything else. Do not entertain the idea of lending them with your credit card or be a co-signature in a loan. Always remember not to put yourself in a situation where someone close to you will affect your finances because of their actions.
Talk about the terms
It will always be awkward to talk about money with family members. Keep in mind to know all the details of lending them. It should include the amount they want to borrow, interest rate if you will charge them, payment schedule, and more. Let them know that communication should always be open.
Ask where the money should be used
Knowing where they will use the money will help you with your decision of lending them or not. it is not about how serious or shallow situation they will use it, but you would want to help them in a more reasonable way.
Discuss the payment schedule
When talking about the term of their loan, always include a schedule of the payment. In the schedule, specify the amount, interest rate (if there is any), and the grace period. You can also include any important points about the borrowed money. Keep in mind to document everything; whether on paper or email. Make them understand all these things to avoid an argument or hurting each other.
Learn to say NO
Keep in mind that there should be no pressure involved in lending money to your friends or Family Loans. If you really cannot afford to lend, say NO. if you are not comfortable enough to lend them, then do not do it. Yes, it is nice to help friends or family member whenever you can but always prioritize your financial situation. Do not allow them to guilt or pressure you into lending them money.