I think all of us have faced this situation where someone we know has asked us for some money to tie them off for a few weeks, or for an emergency. Whatever the situation is, it is not very easy to just give away huge sums of money to someone especially when they are not very close to you. A lot of thoughts come into mind like will they be able to pay back? Or if they actually need the money for what they asked for? There are also situations where people are just trying to take advantage of you. Your risk can be mitigated by a lot if you just follow these basic steps while lending money.A lot of people don’t have an option to go to a bank for even small loans because of their bad credit history or low credit score. Even if they are able to get, the banks will impose very high interest which becomes extremely difficult for them to pay back. During this time, family members and friends are the only viable option left. They would rather ask you then go looking for a payday loan which can further land them into trouble.
Thinking of Lending Money PaydayLV
STICK TO YOUR LIMIT
If someone who is close to you has an emergency or if they need some capital boost for their new business, you will want to help them out. But during the process don’t forget what your financial limits are. I would even suggest making a budget and checking your current savings before saying yes to anyone.
It’s good to help someone out in times of need but while doing so it shouldn’t be the cause of financial stress to you. What if you give away more than you could afford and then you face some financial trouble yourself? There is a very good chance that they might not be able to pay you back in time.
Understand this point, if they are asking you for money, no matter the amount, you have a right to ask questions about why they need it. A lot people try to avoid this situation because it might seem uncomfortable. But think about it, they didn’t feel this way asking you for money. You can even say no if you think the reason, they are giving is very frivolous or if you think they are making it up.
DECIDE THE TERMS BEFOREHAND
This point is very important. Talk about how the payment will happen, either by bank transfer or cash. Make sure to talk about the repayment structure. In how much time will the person repay the money or whether they will repay it in installments. You should also think about charging a fair interest. Even a little bit will make it a better deal for you.
I would highly recommend signing a contract or an agreement where all of these terms are written and agreed upon by all the parties. This will help a long way if there is any legal trouble of any kind. This all might seem to be a bit too extra, but trust me, a lot of legal cases related to money are fought between friends or even family members.
DISCUSS THE MATTER
Before giving any kind of money away, discuss the matter with other family members to check their opinion on it. If the amount being lent is high enough it can be a cause of stress to family relations as well.
DON’T LET MONEY AFFECT YOUR PERSONAL RELATIONS
I have seen this happen a lot. Whenever someone lend money to their friends or family members, it has a tendency to come in between their relationships. You should never ever use money as a weapon in between arguments or things which has nothing to do with the money. Don’t discuss this matter in front of other people if the other person isn’t comfortable with it. For a lot of people this topic can be very uncomfortable to talk about.