Lending money can get you in a tricky situation pretty fast, especially when the time comes for you to get it back. It can damage years of friendship or create rifts between loved ones. But the worst part is that the amount you have lent can make a significant dent in your savings and lead to financial difficulty. This is why you need to carefully think before loaning money to anyone, especially if it is a near and dear one. Here are some of the things that you should think clearly about before lending money.
Can You Afford It?
If not, then a straight and simple answer is ‘no’. Explain how you too are short on money or how you need it for certain tasks, and politely yet firmly refuse. The person may feel resentful for a while, but at least the chances of further complications are reduced and you yourself will not have to face any monetary crisis at the last minute. Refusal to lend money is better than you ending up with a loan of your own.
Even if you can afford it, check out how much of it can you give without compromising your own well-being. You don’t know when an emergency strikes and if you have $1000 in savings don’t give away the entire amount. Tell the person that you can lend $500 only. According to experts, you should always loan money with the thought that it may never be returned. This way, you don’t face any difficulty.
What is the Loan for?
Never, ever, make the mistake of lending money to someone who is a habitual borrower. They will discover that you are ok with giving away money and will constantly bug you for more. Hence, ask them what they need the money for. Is it possible that they have gotten involved in something like gambling or drugs? If yes, then the worst thing that you can do is lend them the sum they ask for. Instead, try to get them the help they need.
But the money could be for a sick loved one and if this is something you can help out with, you moist certainly should. Just make sure you ask to see the loved one and pay yourself so that the money is properly utilized.
Can the Person Pay Back?
If yes and the situation has happened before, then you can easily lend the money without much worry. If you know for a fact that they won’t be able to pay back then either don’t lend the money or give it away without expectation of return.
If the person has ever lent you some money in the past, make sure you try to help them out the best way you can. Trust your gut instinct here and even if the person is unable to pay back, let the issue go.
The end decision is always yours. Just be very careful when you lend money to anyone.