Don’t Lend Friends Money Without Reading This

Budget101 Discussion List Archives General Budget & Finance Don’t Lend Friends Money Without Reading This

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    • #270300

      By Sally Herigstad
      There’s a girl we’re going to call Alana who is the prime example of how not to lend financial support to friends and family. alana only wanted to help. she bought her unemployed friend a truck so he could look for work.

      she put the truck in his name and the loan in hers – now the friend and the truck are gone and she’s still paying off the loan.

      most people don’t buy trucks for their friends, but you’d be surprised how many people get into financial difficulty trying to help a grown child, a romantic interest, or even an acquaintance with a sad story.

      you can help people without jeopardizing your own financial stability. next time someone asks for help, remember these tips:

      if you lend someone money, get everything in writing, including when you expect to be paid back.

      don’t co-sign on a loan unless you are prepared to make the payments yourself if the borrower doesn’t.

      remember, you can’t solve all of anyone’s problems. unless you are very, very wealthy, you can’t go around adopting adults and letting them become your dependents.

      be honest about what you can afford. you might be able to help with a doctor bill or fill their gas tank so they can get to work. if you can’t afford to pay their rent, admit it.

      concentrate on helping people with one problem at a time. for example, if they need a job, you can help them write a resume or give them rides to job interviews. don’t buy them a truck!

      sally herigstad is a cpa who has written extensively on personal finance issues. she is also the author of “help! i can’t pay my bills.”

      © Can Stock Photo Inc.

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    • #413676

      great advice. thank you for posting this.

    • #413678

      You’re very welcome! I hope it helps someone. 🙂

    • #413701

      We have helped friends and family so many times over, and it turned out bad every time. Now we don’t loan anything to anyone. Sad but true.

    • #413702

      my boyfriend loans money out to friends and gets it in writing. Problem is even with the agreement some of them we cant get to pay even 20.00 a month. I keep telling him friends and family will stick you before anyone else will.

      One day he might listen.

    • #413856

      Never co-sign a loan- whether you have anything in writing or not, whatever loan papers you signed you agreed to pay even when the “borrower” doesn’t pay. At my last job we discouraged our members (I worked at a credit union) to co-sign loans. More times then not if someone needs a co-signer then they shouldn’t be getting a loan period.

      To need a co-signer your credit has to be pretty bad. Young adults with no credit history can build credit without getting a car loan believe it or not. Even co-signing a loan for your children is never a good idea when they want a new car.

      It is not mean to not co-sign, they should learn that you have to start off with not so much a dream car as you start off with what you can afford- if that means they have to save up for a $1500 car then so be it. Just say no to co-signing! 🙂

    • #413872

      A friend of mine asked me once to borrow $500 and I sadly told her no since I was saving up for a new car at the time. I did offer to spend the day with her going to banks and credit companies trying to figure it out. I have kind of always regretted helping her since she is such a good friend but who knows how it could have turned out?

      Another friend was in a similar situation and asked for about $50 but all I had at the time was $20 – never saw it back and she never mentioned it again. She did go through a rough patch and it took her about a year to climb out of it but I don’t feel like its appropriate to ask for it.

      Money is such a sticky situation especially with friends. Thank you for this post! It’s so difficult to know exactly what to do when put in that situation.

    • #413956

      It is I borrow my friend 1000 $ and never see it back
      Bye bye money

    • #428091

      Been there, done that. I regret the loss of my friend much more than the loss of the money. Sadly things were never the same between us after that loan.

      We just slowly drifted apart.

    • #428247

      I can relate, I’ve “helped” so many people and usually they disappeared after getting the money. My new favorite moto is “the best thing you can do for your poor friends is not be one of them”!

    • #428320

      I’m one of those that have learned the hard way about loaning $$/co-signing loans. I’ve got a “friend” who only talks to me when she needs something BORED1 smilie… money/ride/co-sign on a loan…

      I cosigned on a loan for her about 7? yrs ago & it was for $3000 … then found out she had defaulted on it (she could have put it into deferment) & I found out when I had the sheriff’s office give me papers for a lawsuit…

      last year it was up to almost $7k… I paid it b/c it was my credit but never never never again.

      Now when she calls, I don’t answer it or if I accidently do answer it, when she asks me how I’ve been doing I let her know just how crazy things are etc etc (she lives an hour away from me). Sometimes she’ll text me asking for $$ money1 smilie but I never answer those texts anymore & when she calls, i don’t even acknowledge them. if she ever asks me directly, sure i will be telling her the bank of kim does not apply to her.

      this is my $$$ not hers (for a while there, after i recieved an inheritance, she acted as if since i now have more than enough ~ rather than just scraping by ~i’d be excited about “helping” her. :siggycensored: since she has never worked her tail off to get out of debt, keep a job, build up savings etc etc that’s her own fault, not mine.

      she is one of those that tends to blame every problem that arises on someone or something else, she never acknowledges that it is her own fault :drama: since i loaned her/co-signed on her loan, it’s my fault that my credit was messed up b/c she defaulted. & this is some1 who lives in gov’ment housing (she picks the house & ohfa picks up the rent for her), lives off dhs funds ~ since her daughter was a baby & is now 14, doesn’t work b/c “she doesn’t want to” & then expects everyone else to just chip in when things come up that she can’t afford. & up til this past yr when my husband & I bought our first house, has always lived in much nicer housing than I ever did when I was a single mom or when my husband & I were just starting out.

      money1 smilie I will NEVER be in that position again. I’m with every1 else… if they need a co-signer then they shouldn’t get a loan.

      Like the above person… evaluate everything you know of a person before you “help” them to your money & if you can’t afford not to get it back or have some other purpose in mind for that $$… let them know that you can’t help them.

      if it weren’t for the fact that i love her daughter so much, i would let this “friendship” dissolve into the background…

    • #430073

      Wonderful advice. We need to follow it ourselves!

    • #432353

      We teach Crown Financial and the advice is to never lend, even to family. We won’t do it.

    • #432358

      I won’t lend money to friends or family. I was taught that lesson the hard way many years ago from experience. Bad business that…

    • #442281

      we lent a girl a few hundred dollars (she was worked at our favorite restaurant in town) Less than a week later she quit her job and disconnected her cell phone number. We never heard another word from her. I ran into her at a walmart one day and she turned the other way and high tailed it out of there.

      We pretty much decided that it wasn’t worth lending out $$$ to anyone.

      It was our 2nd time lending money like that and never getting it back. I guess I’m a slow learner.

    • #442700

      If my husband and I were in a position to help someone (right now our budget is at it’s tightest), we would “give” money if we were able to but NEVER loan money.

    • #458088

      Thanks for the advice, very useful info, sad that it can’t just be settled on a handshake, and not have to involve contracts.Thanks for posting.

    • #458094

      I might let someone Borrow a few bucks..But that is it..thanks for the advice

    • #458111

      I agree with Tsgal. We have lost what we thought were good friends several times after loaning money or expensive items to them. Every time I have loaned something, I eventually have to ask for it back, and this seems to create hard feelings both ways.

    • #460299

      I used to loan money but no one ever wanted to pay me back so now if there is someone that needs it I will just give the money to them so that way there is so bad blood made

    • #460612

      very good advice to live by.

    • #463196

      Lending family and friends money is a great feeling but it isn’t much so when you don’t get paid back LoL

      I’ve been on this road a couple of times and I’d like to think I’m helping them out by lending them some money and buying them stuff but come to think of it, they’re grown ups already and it’s about time they learn to be responsible of their own financial situations.

    • #464513

      Gonna read this again next time someone asks me for cash

    • #464569

      If a friend needs some cash I’ll help out. I’ve never been burned.

    • #465127

      get everything in writing, including when you expect to be paid back – this is really good advice

    • #596731

      The last time I borrowed from friends, it ruined our relationship. And by the way, it was not my fault.

      The written form is certainly good, but before, when I borrowed, I paid everything without unnecessary problems. Recently, a friend demanded a written contract, for no reason. And we had a very falling out, because for me it was of principle – I am honest and would never exchange a friend for money.

      Now I am at odds with a friend, and I have to use loan services instead. I am confident that I can pay them, so for now I will use them and try to improve relations in the future by not asking my friends for money at all.

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Budget101 Discussion List Archives General Budget & Finance Don’t Lend Friends Money Without Reading This