Lending Money to Family and Friends
Whether it’s helping your kids get on the housing ladder, providing cash for your brother to buy a car, or paying for a friend to join you on holiday; there are times when you may want to lend money to family or friends. However, quite often a loan given in good faith can lead to unpleasant repercussions further down the line and many people who have lent to friends and family would advise others against doing the same.
If you are planning to lend a sizeable amount of money to a loved one, there are a few things to consider in order to avoid uncomfortable discussions or falling outs at a later date:
- Be clear about whether it’s a gift or a loan. If you say “let me help you out”, the recipient may think you are giving them the cash when you intend for it to be paid back.
- Write down the terms of the loan. This will save any arguments in the future and helps set out a fair repayment programme.
- Agree the purpose of the loan in writing if it’s important to you. For example, if you’re lending someone money for house repairs but you later find they’ve spent the cash on designer clothes, how will you feel?
- What will happen if the loan is never repaid? If you feel this would seriously damage your relationship, it’s probably best not to make the loan.
For more money advice, visit: www.moneyadviceservice.org.uk/en
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