Lending money to anyone is a risk, but with a friend or a family member, there is an added risk of emotional attachment. Therefore, getting it in writing and making sure you are only lending what you can afford is crucial. In this article, we will be providing you with insight into the dos and don’ts of lending money to your family and friends.
Only Lend What You Can Afford
When looking to lend money to a friend or family member, you must make sure you are only able to lend what you can afford. Whether it be £200 or £10, it is important to make sure that you are only looking to lend an amount that you can 100% afford. This will make sure that you are not stretching your own budget to the breaking point.
Don’t Let Guilt Affect Your Decision
Though some people tend to opt for alternative finance such as payday loan direct lender UK services in a financial emergency, some may want to borrow money from you. Therefore, it is to make sure that you do not let guilt affect your decision. This could lead to you putting yourself out of pocket for that month. Therefore, it is important to make sure that you are only lending what you can afford and not letting guilt affect any part of your decision. Though this may be difficult, it is important to lend money with a clear mind without feeling guilt-tripped into lending them money with no guarantee that you will be getting your money back on time.
Get The Agreement In Writing
When you lend your loved one money, it is important to make sure that you get the agreement in writing. By getting everything, you need in writing, you are able to hold them to the agreement within a time frame and make sure that you are protected should anything be needing legal action. Though this is unlikely with someone that you trust, it is important to have everything in writing to make sure that you are protected and can get the money back at a later date. Whether this is through the court system or monthly repayments agreed with them, you will get your money back in due course.
Don’t Assume The Other Person Will Act In Good Faith
The final element that you will need to consider when lending money is to not assume that the other person will operate in good faith. Though you would like to think that your friend or a family member will act in good faith, it is possible that they may not give you the money back. Therefore, it is important to not lend money to anyone that you are not willing to taker to court. This will mean that should you have to take legal action you can without any issue and without putting yourself at a financial disadvantage.
With this in mind, there are several options out there for you to consider when it comes to lending money to a friend or a loved one to limit the impact that this can have on your finances.