Financial issues can be difficult to deal with. When this kind of situation arises, you want to make sure that there is a means for you to get the extra funds you need to cover your expenses. This is why some people head to the bank with the hopes of being able to take out a loan while others search for other options for them to obtain emergency funds in case banks decline their loan application.
On the other hand, it is also common for some individuals to approach their friends during moments of money issues. If they are comfortable enough with loaning a certain amount from a close friend, then they go ahead and consider this route. The question is, how willing are you to loan a friend some money? Do you feel comfortable doing so, or are there any reservation on your part before you agree to lending some cash? It is quite common for individuals to consider lending money to their friends. For instance, if it is only a few dollars just to pay for a meal or some groceries, there should be no problem with giving some money to a friend who may be short on cash. But what about in the case that involves hundreds or even thousands of dollars? Are you completely sure about lending your dear friend a bigger amount of money?
Don’t feel bad if you are suddenly a bit uncertain about saying yes to your friend who’s asking if he or she could borrow not just “some” cash, but thousands of dollars from you. When it comes to money, the whole atmosphere changes even if you have been close buddies since college. Sure, you want to do everything you can to help a friend who is going through a tough financial time. Yet, there is this fear and anxiety hanging in your head, and you are concerned that your friend might not pay you back.
To make matters worse, emotions and trust are invested along the way. If your friend promises you to send the payment at a particular time, yet fails to do so, this ruins everything and there is the risk of losing your friend at the same time. Now, it is a double whammy that no one ever wants to go through! So, what can you do when you are faced with this kind of scenario? How can you handle this situation without embarrassing your friend or feeling bad along the way?
Before you sign a check and give it to a friend, it may be worth looking into these 5 important things that you should take into account, which can save your friendship (and maybe even your money) before things get out of hand.
1. Offer alternative solutions if you can
First thing first, weigh your friendship before you consider anything else. If you are not close to this friend of yours, you can always offer alternative solutions if you feel bad. You may connect him or her with a licensed moneylender in the country who can give the amount needed with just a minimal waiting period and less tedious loan application process. Always remember that you should never feel pressured to lend a money if you do not feel good about it. It IS your money, and you have every right to it even if someone close to you needs some financial assistance. Just be a good friend and be genuine with your reasons for not lending money to him or her. Then, provide some alternative options that will give your friend access to emergency funds to cover his or her immediate needs.
2. Know if you can afford to lend some money
Other case scenarios, if you love your friend to pieces, but then again, you have to think about yourself first, too. The main thing to think about when it comes to lending money is to determine your current financial situation. If you are having some difficulties in terms of your finances, then it does not make any sense at all to even consider lending some cash to anyone, even if it is your close friend. Prioritize your needs more than anything. You need to manage and handle your finances effectively, then once your cashflow is stable, then you may feel comfortable lending some cash. This will also prevent you from nagging your friend to pay you back only after a few days of sending the money. After all, nobody wants to constantly beg someone for loan payment, right? Not only does it get awkward and weird, but it can significantly add to your stress level.
3. Determine your friend’s ability to repay the loan
We all have the fervent wish that our friend will truly keep his or her word and pay us back according to the agreed date. But then again, the pressing concern here is knowing your friend’s capability to settle a debt. They probably have loans in the past that they have successfully paid back, which could give you some assurance of their word of honor and sense of responsibility.
But it gets tougher if your friend has a history of not paying people back. What’s more, if the money issue is serious, how do you think this individual can actually repay you in the future? There is a huge chance that you can say goodbye to your money and not receive it anymore, particularly if it seems your friend’s financial situation is severe.
If you want, you may have a heart to heart talk with your friend. Ask how long it will take for the loan to be paid in full. This, of course, is applicable to friends who have a good history of repaying debts. Otherwise, there is no point going to this route if you have an inkling that your friend tends to borrow cash and not pay the person back afterwards.
4. Think how things may turn out if you no longer get your money back
The next thing that may be worth looking into is this – will you get badly affected if you end up losing your money? You have to be more realistic about things, and there is indeed a huge possibility that you may not get paid anymore. Well, this is the worst case scenario, but it is sometimes best to consider such instance to be prepared in case it comes.
Now, do you see yourself suffering from a terrible loss if you are not paid? Will it greatly impact your finances and put you in deep water? Most importantly, will this jeopardize your relationship with your friend?
The fact is that once you no longer get paid, there is a high chance of a drastic change between you and your friend. The relationship may only turn sour, and this is common if not being paid ends up placing you in a really tough financial burden.
But for those who have no money problem at all, they probably do not even care much if the person does not pay them back. This is the case with people who have strong ties with their friends, and they value their relationship over the money borrowed.
5. Know the reason for borrowing money
Naturally, you would want to know first why your friend is even borrowing money. It could be due to a health reason or to pay school fees, or perhaps to cover for some immediate personal expense. But at the same time, if your close friend is the one borrowing money, you may not even bother asking what the cash will be used for. Just the same, though, it would be good to know the motive behind the need for extra cash.
Food for thoughts
Ultimately, there is nothing wrong with saying no to a friend. You have to consider several areas before you decide to loan some money, and think about the consequences that may affect your finances and your relationship with your friend.