Lend money to a family member, yes or no?
To answer the question of lending money to a family member, yes or no, several factors must be considered in addition to the emotional one. Some consider this gesture as lost money. Let’s look at it carefully.
Should you lend money to a family member?
The subject is rugged and delicate. We say rough because it can detonate quarrels as well as temporary or definitive ruptures. On the other hand we never know if those resources will be returned to us or not. Many claim that it is like throwing a coin in the air.
It is clear that it is the easiest and fastest way to finance something, in addition to the cheapest one because that money rarely comes from interest.
Suggestions to lend money
Although they are not mandatory, taking certain precautionary measures are not over.
- Try to leave everything in writing: amount, term and amount of each payment if biases are made.
- Write an emergency plan with your debtor in case financial problems arise.
- If you can, ask for a guarantee.
- Charge interest, even if they are symbolic so that you do not lose purchasing power. You are not a usurer either.
When a family member borrows money, you must first think about why they ask you and not someone else. If it is a loan to buy a house, why not go to the bank? It is likely that they imagine that your work generates great profits or perhaps it is because you are opening a house or a new car or because they may not have a good credit score.
Something very important
Keep in mind that there is a personal relationship at stake. Money is not equal to the happiness and love that may exist between you. Take all necessary precautions so that lending money to that family member does not end your relationship and that includes saying no, if it merits it. I better make a momentary tantrum today, to end the bond in a strict way.
It is a good policy to say: “My policy is never to lend money.”
