There have been many words about why you should not lend money to a friend or relative, or how to say no to someone who wants to borrow money from you.
How do you say no when they ask you for a loan?
If you haven’t done so already, read the other articles linked in the article above, such as statistics on the rate at which borrowers repay the amount they borrow from friends and relatives. I still do not lend to friends and relatives because it causes a lot of tension and problems, not to mention the money lost. Today there is a personal loan institution around the corner, from normal banks to financial service providers like Provident, and almost everyone can turn to a financial institution for a loan.
If you do not turn to them, it is either because you are no longer borrowed from anyone, not even Provident, or because you want to save interest, so you are asking for money because you will surely give it at no interest. Like asking him to take you to the airport with your own car at your expense so he doesn’t have to spend a taxi.
I’d rather discourage you from lending to anyone
But if you do, what are you worth paying attention to? Consider borrowed money as if you were investing money in a very, very bad and risky investment. Can you afford to lose that money? What is the maximum amount you can lose? If you want to borrow more than you could put your financial life at risk without jeopardizing you, you are not the right person to give him money.
Make it clear that this is a loan and not a gift. Make it clear that you are expecting your money back. Also, discuss the “worst case scenario” in advance, so what if you can’t return the money despite all your promises? Will you hand over your car? Selling a holiday home and paying for it? I know it may sound very sharply such a conversation between friends or relatives, but will know that you did not get a gift, and this money will have to give back really.
In most cases, there is no deadline for such loans, which is not good for either the borrower or the lender, and is why most of the time the borrower thinks that it is worth giving money at no time.
Also, the lack of a deadline causes the borrower to put your money in the last place, as it is worth giving once you become very rich. Always have a precise deadline and schedule for how you expect your money back. It’s best to stipulate, for example, that you need this money by the end of the year at the latest, so if you pay back your tithe every month, you will receive the full amount by then.
Make a credit assessment
Just give what the borrower can actually pay. Ask him for a budget, what he spends, how much he stays on his salary, and whether the loan money can be repaid. If not, do not give a loan because it is not guaranteed to be a loan, maximum aid even if you do not intend to. Again, make sure you go through: If you don’t have the budget to pay off, don’t lend me money. If you want, give aid but no credit.
Never lend money on an emotional basis. Not even because the borrower is in despair or very sorry. You can give him a donation or aid on an emotional basis to get him out of trouble, but give him a loan only if it is realistic to be able to repay it.
For example, if you lend $ 5 million to someone, at today’s interest rate you would lose $ 225,000 a year in interest. Therefore, you can safely tell him that you are giving money out of favor, but be so kind and at least cover your interest loss if you are already risking your money. This is especially useful if you want to borrow money from you to get rid of the bank interest at your expense. (You know, he saves you in the airport taxi to get you out of the airport with your car for your money.) Of course, you don’t ask for interest from your own child, but pretty much everyone else would ask for at least interest-free government bonds.
Always write a paper on it, with two witnesses, more than a notary. Not only to see that you are serious and have a trace of what kind of schedule you have discussed, for example, but because if something happens to it, let’s say you suddenly die in an accident or heart attack, how you will prove that you are really right for your money from your inheritance?
Keep in touch with the borrower, call them if they don’t report that everything is fine. If you are unable to pay, communicate with him regularly. In Hungarian, keep calling. Be very understanding, but tough enough. Don’t accept generic blank phrases that I can’t pay right now, it didn’t work out as I planned.
Tell them to sit down and see how you can save and the rest. Be clear before you do this: we are not looking at how many months you can lose your money, but how many months you can lose your car, for example, to pay you back the money you fill up.
However, do not create unnecessary anger, control or sign the borrower, your relationship is already heavily burdened with credit, and you do not need to exacerbate the problem. Be helpful, understanding, comforting, but tough enough and self-interested. In other words, you can be a lamb but not a sheep.
If you lend to someone, act like a bank
Even if it is a relative or friend. On the one hand, while you are paying, do not say what you took from your money, for example, because you are not a friend, but a banker. However, if you do not pay, feel free to tell him that you do not think that you should go to the beach for your vacation, and then go after you have received your money back.
You don’t have to listen to the problem between you like the elephant in the living room, unless you talk about it disappearing. Feel free to bring up the subject again and again, the problem will never be solved by itself. (And next time you’ll know why I told you never to lend money to a relative and a friend. ?)
“Don’t borrow, don’t give: because credit loses itself, your friend,” as Polonius said in Hamlet. And according to the Bible, the borrower will be a slave to the lender, and it will not be good for a slave or master to be in a friendly or kinship relationship, neither is a grateful role.
Therefore, I would continue to encourage you not to lend money to a friend, relative or friend, you can now request money from thousands of financial institutions up to an hour in need. But if you do, at least keep the above and maybe you will not poison your relationship with the borrowed money and you will even get it back. Yeah, and yes, the article is not about giving your child twenty thousand until the scholarship comes, or helping your best friend on vacation with a few thousand, which you both forget.