The Right Ways to Lend to A Friend

Friendship is great until money gets involved. It’s a sad truth but many friendships do get shattered because of highly fragile topics such as borrowing and collecting cash. But as a person, you know you can never turn your back to a friend in need. When one has lost his job, can’t find other means like a personal loan, or needs money for an emergency, you generally extend money unhesitatingly.

But this is where the wrong things start to form. Lending money without a clear set of conditions is perilous to your finances, most especially to your relationship with that person. So what is the best way? Honesty is the best policy, even when you feel embarrassed being upfront to a friend like that.

Lending

Put it in writing. It doesn’t have to be formal. Any piece of paper, even a napkin, will do. Write the following:

The amount of loan.

Date.

Date it will be paid.

Interest rate if applicable.

Collateral if there’s any.

And lastly, both of you need to sign it.

In the future, in case borrowing from you becomes a forgotten scenario, you have evidence to support the act of kindness. And this is very possible. Some borrowers deviously forget or avoid confronting what they owe. It’s either they don’t have the means to pay you back or plainly never intended to do so in the first place.

Collecting

When the payment date has come and gone and there is still no sign of your friend’s intention to repay, you can proceed to collect the money from them. At first, you can use the more discreet way such as sending SMS or email. These are non-confrontational ways and allow self-preservation for both you and your friend.

If this one doesn’t work, then you have no choice but to proceed with personal confrontation. During this time, you may be furious, you may be embarrassed. But to avoid piquing hurt or shame, ‘remind’ him in a nice way.

Don’t Force it

I know how you want to be of help, especially to a friend who has a good cause in borrowing. But if in any way it is risky on your part, such as involving taking personal loans just to lend; or you simply can’t afford to give, then don’t lend to your friend.

You see how delicate lending is? I know that most times, you just don’t want to be known as selfish. But if you really must lend in significant amounts, do so with appropriateness and awareness. This way, you don’t only save your friend from dire need but your friendship as well.