Lending money out to family members and friends can sometimes look like a genuine attempt to try and help out especially when any one of them is in a sticky situation and you are the one person who is in a position to help. But sometimes, it may not seem to be the best idea especially when it comes to the time of the repayments.
Look at these seven reasons why you must never lend money to your friends or family members and make your overall judgment based on these findings.
1. Open-ended loans
One thing you must always keep in mind is that loans to friends and family members tend to be open-ended. In most cases, you realize that both the parties don’t actually agree on a set timeline for the repayments to be done. Then there are also never any interests included on the loans.
Pro tip: if you decide to lend money to your friend or family member, ensure that you set a timeline for which the debt must be repaid and a schedule for the repayments as well. You should even include a deadline in the schedule as well.
2. Loans are not a priority
In most of these types of loans, the borrowers may sometimes not realize or even comprehend the urgency with which the lender needs the loan amount back and without a deadline being set on the loans, they end up becoming the borrower’s least priority.
The borrower also knows that there won’t really be any consequences for overstaying with the loan which makes it the more reason to not prioritize it.
Pro tip: ensure your friend or family member knows that repaying the loan is a priority and ensure you set a deadline as well.
3. It’s always difficult to ask for your money back
Sometimes, it can be very difficult to ask for the money you loaned out to your friend or family back. You care about the borrower and don’t want to feel like you are being pushy.
Pro tip: if you had already lent the money to your friend or family member, then you need to try and talk to the borrower and try to resolve the situation. Gentle reminders can also help.
4. A family gathering can become awkward
This especially happens when you lend or borrow money to or from a family member. Such cases can make family gathering be very awkward especially after there have been previous altercations regarding the loans.
Pro tip: you can meet up with the other party and come to a private agreement concerning the loan. None of you need to feel uncomfortable or awkward whenever you step in the same room.
5. The borrower becomes submissive to the lender
This is always the case whenever the borrower gets some money from the lender and delays with the payment or is unable to pay. In such situations, the borrower may not be able to oppose the lender in any situation.
Pro tip: if you realize that your borrower is feeling some kind of discomfort having your money, then try and ease the situation.
6. You are enabling instead-of helping your friends or family members
You will only be offering the borrowers an easy way out of their financial problems instead of actually helping them work through their issues.
Pro tip: you should try and put your family and friends in positions where they can improve their financial situations themselves and understand how to manage money. This way, you will truly be helping them.
7. The borrower may even ask for more
If you have ever lent money to a family member or friend, chances are high that they may come back to ask for more money from you. Other friends and family members may also want in on the action and ask for www.lendgreen.com loans too.
Pro tip: try and avoid being the go-to lender to your family members and friends.