Do You Need to Give a Loan to a Friend :
There always comes a time when your friends might be in need of some financial help. Now the question that arrives here is should you loan them the money? Well, that is completely on you to decide. However, if you choose to say yes, you must be careful. In this article, we have discussed all the things that should keep in mind before giving a loan to your friend. Here they are:
Ask Them Their Plan Of Action
This is one of the primary things you need to take care of. Whenever you are thinking of loaning your friend any money, ask them the reason. What will they be using the money for? Why do they need it in such urgency? How long will they be needing it?
These questions will help you gain a lot of clarity behind your friend’s needs. After this, you can weigh the pros and the cons and then loan them the money accordingly.
Review Your Friend’s Finances
Before you give your friend a loan, take a peek into their finances. See if the size of the loan they are asking for can be easily repaid by them. If you feel your friend is financially stable enough to repay you the loan, proceed ahead. Otherwise, you might get stuck with a very bad deal. It also has the risk of ruining your personal relationship with him.
Set Up A Monthly Repayment Schedule
Before you agree on giving your friend the loan, there is something that needs to be set beforehand. It is a monthly repayment schedule. This will help you receive timely repayments. It will also help your friends not to slack about the loan. You and your friend can collectively reach an appropriate amount for the monthly repayment.
Make Sure The Loan Is Not Treated As A Gift By Your Friend
This is a very important point that needs to be clearly mentioned to your friend. Make sure he/she understands it perfectly that this loan is not to be treated as a gift from you. This will help you not strain your personal relationship with your friend. This will also ensure he/she is completely committed to returning you the amount loaned as soon as possible.
Get It Down On A Paper
This is the best way to safeguard your money. If your friend agrees to put the terms of the loan down on a paper it is a big plus point. It will help you keep your monetary and personal relationships apart. Also, if things go wrong, this written agreement will definitely hold up in the court of law.
Do Not Nose Around Your Friend’s Business
If you have finally given your friend a loan, do not nose around further. Giving your friend a loan doesn’t give you the right to meddle in his/her business. It is completely up to him/her how they utilize the funds. This is something that can be very irritating. This might also turn your personal relationship with your friend very fragile.
This brings us to the end of all the pointers you should keep in mind when giving your friend a loan. We hope you can use these pointers very easily if you ever found yourself in a similar situation. Also, let know if you have ever loaned any money to your friends and how did it go?
