Lending money to friends

Discussion in 'Private & Conventional Lending Discussion' started by Corzhens, Aug 25, 2015.

  1. Corzhens

    Corzhens Senior Investor

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    This though occurred to me because last month, a close friend approached me to borrow a huge amount that is equivalent to 6 months of her salary. She needed the money because she had mortgaged their house to private lenders that charge a high rate of interest. And the mortgage is not regularly paid so it is nearing forfeiture. But even if want to help, how could she pay me when she had a bad record with other employees in our office? My husband said that if you want to lose a friend, lend him money. As simple as that. You lose the friend, you lose your money in the process.
     
  2. pwarbi

    pwarbi Senior Investor

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    I think it depends on the amount of money, and what effect it will have on you by lending it.

    For example I lend my friends money all the time if they're ever short at the end of the month, just like in the past they've done the same for me. I'm talking about fifty or a hundred dollars, nothing to big and I've always got it back, as have they when I've had to borrow off them. These days money is a struggle for a lot of people and if your in a position to help out a friend, then you should, as you never know when you might need their help in return.

    Having said that, if they're asking for thousands and by you helping them, your putting your own financial wellbeing at risk, then the answer will obviously have to be a no.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    Big amounts like that... no way. Never never ever do that... it's too risky. Both from a personal and financial point of view.
    If your friend can't get a loan from a bank then chances are it's because they don't think that she can pay it back. So why would you think she can, you even doubt it in your own message? And then the friendship is gone.

    I loan money to friends but only very small amounts. And larger ones but those are special circumstances... max I've loaned is 1000e but I knew for a fact that I would be getting it back no matter what. (we had the same employer, a very reputable one, so I knew he was going to be getting paychecks that allowed him to pay it back)
     
  4. Corzhens

    Corzhens Senior Investor

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    Yes, I would never lend that big amount of money even to my siblings. In banking, there are always 2 elements required in a borrower, first is the capacity to pay and second is the willingness to pay. Almost always, it is the capacity to pay that is in question but in my experience in personal loans, it is mostly the willingness to pay that is the crux of the matter - some borrowers just try to elude me with the thinking that I would just condone their debts. Some people are like that.
     
  5. 111kg

    111kg Guest

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    Unfortunately, I've been on both of the sides. I too was once the friend that borrowed and who didn't pay back (because I wasn't able) and lost one of my then mentors. Now that the things have changed, I sometimes borrow my friends small amount of money. I know in some cases I won't get them back, but it's because they are jobless, reason why I prefer to actually give them money considering it as a gift that can be repaid whenever possible.
     
  6. SteakTartare

    SteakTartare Senior Investor

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    In general, no, I don't lend money directly to anyone. I have, however, helped out family members who were in dire straights for one reason or another. Some paid it back, some didn't, but I don't care because it is familia. Friends, though, I think the potential for things going bad are simply too great to do so.
     
  7. Corzhens

    Corzhens Senior Investor

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    I guess small amounts to lend to friends is okay. What bothers me is a friend approaching to borrow a huge amount as if he had a plan to run with the money and never to come back anymore. My husband had a lot of sad experiences - he had lost many friends who borrowed money from him and never came back again. Until now, my husband has that list ranging from $15 up to $50. That meager amount equivalent to the dignity of those people, tsk, tsk, so pathetic.
     
  8. gracer

    gracer Senior Investor

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    Money and friendship are two conflicting factors of life nowadays. Lend a friend money and if they pay you back, it's a sign that they indeed deserve your trust and compassion. If they don't pay you back, you risk losing both your money and your friendship. Sometimes if you don't lend them money, you also risk losing your friendship with them because of grudges that they will hold against you. I remember an old classmate of mine from my back from my elementary years who happened to live in the same community as me. He approached me, begging me to help him by lending him money because their small business was put down by a fire. I took pity on him but didn't have money to lend him then so I told him to try approaching my father who was known to be a generous person in our place and would lend money to people who needed them. So when he came to our house and talked to my father, my father lent him money even if he had a limited amount of money in hand during that time. That's how compassionate he is.

    Months have passed and we haven't heard anything from that old classmate of mine so my mother decided to visit him at his house. My mother was surprised at the way my classmate's family treated her when she went to their house to look for him. His sister had this look on her face letting my mother know that she wasn't welcome in their house. After several visits to his house and not ever seeing him at all, my mother gave up. There came a time when we also needed money because my father was hospitalized but that classmate still didn't have the heart to face us and pay his debt. Up to this day, after almost 10 years he has never paid back what he owed my father and we have never heard from him.

    It's so sad how some people tend to forget the goodness other people hs given them in times when they needed help.
     
  9. Sunflogun

    Sunflogun Well-Known Member

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    This has to be a tricky situation. I mean, if it's a real friend sure we should do it, but if it's just a "friend" it might be the reason for the relation come to an end. Money is a complex business.
     
  10. kgord

    kgord Senior Investor

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    Yes, I think there is an old adage that states something to the effect that to lose a friend lend them money. However, are there other ways you can help like help her find a public assistance program that can lend her money. Or maybe accompany to her to a lawyer that deals with property matters to see what they can do and how they can help..I am sorry for your friend, but as you said, she has a bad record of paying people back..I understand she must feel desperate, but there are other ways to help besides giving her large quantities of money.
     

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