What should you look out for when lending money? To a lot of things, unfortunately. We will try to help you as well as possible by putting them all under each other, copy them if necessary or save the link to this page. Borrowing money is not just something, certainly not when it concerns a fairly large amount. Even if you are going to lend money to friends, family or other acquaintances, make sure you know the points below!
- What does he / she need the money for? Do some research yourself if you are not completely familiar with it, ask something and ask difficult questions to him / her. If he / she is in trouble and someone owes a lot of money, it is not convenient if that money is borrowed from you, then you have that whining.
- Why does he / she not borrow from family, such as parents? Where is the money he / she has (earned)?
- Is it really, really, really necessary? It is often unnecessary, but just a ‘moment kick’, as we call it. For example, a new computer, don’t lend money to your friends for it.
- What is the chance that you will get the money back? Does he / she have a job, or does he / she earn fixed money? Does he / she have enough security for the coming months / years to pay you back the money?
- What if you don’t get the money back? Agree on this together, a worst-case scenario. Think about it, make sure you have it on paper, if only to be sure.
What should you not do?
We’ve had enough of what you should do when lending money, but what should you not do when it comes to lending money? You are going to lend money, what are the things to avoid? We have put them together, in points. What you should not do when lending money, that is a question that is asked – quite often – it is simply not clear enough, so here is an excellent overview.
- Just lend some money without going into it. Once in a while € 20, then once € 50, next week again € 60, it doesn’t matter to you much. This is not handy, you should definitely not do this.
- Lending money without knowing what he / she needs it for, you also don’t know if it will all go into someone else’s pockets or if he will keep it.
- Lend money to people you don’t trust enough. Lend money to people where you are sure they will do everything to pay you back, you naturally want the money back.
- Lend huge amounts, they just go to the bank for this. The lending of huge amounts can only turn out negatively, don’t start with this. If it’s a student who asks for this: don’t do it at all. It can take years, if not tens of years, for someone to pay off a student loan, there are special student loans for this.
There are of course more things you shouldn’t do when lending money (to friends, family, acquaintances), actually too many to mention. Use your mind, think logically. Read our page with things you need to do, write everything down properly, make sure you both know where you stand and especially: don’t let it ruin your friendship, that would be a shame.
Lend money to friends
Lending money to friends, a lot can go wrong there. A loan where one friend borrows (in) money from another is what we call a friend’s loan. A friends’ loan is more dangerous than you might think, it can destroy a lot; money is money. It is not wrong to lend money to friends, but be careful and read our tips carefully. Lending money to friends is not complicated, but if you take care of a number of things, the chances of getting a nag are a lot less!
Imagine: a friend of yours comes to you and asks you if you want to lend him money (a friend’s loan). You don’t know very well, because you don’t know that person very well, but you are just a good friend. You ask for the amount involved and the answer is that it is about € 500, he paid you back within a month. What do you say? Indeed, you just say nothing. It is good to think about this, because this can happen to you. Friends who ask other friends for a loan, that is already where things go wrong. If you need a large sum of money, you borrow from family or the bank, but not from your friends. There are few options that will make this a success. If you say ‘no’, the person is angry with you because you do not want to lend him any money, he concludes that you do not trust him. Well, a € 500 friend loan, does that have anything to do with confidence? But if you say yes, there are 2 things that can happen. Or, you take out the friends loan and lend your friend money, he pays you back nicely within the agreed period and everything is fine, or you lend money but don’t get it back (on time), creating a kind of tension. As you can see, the chance that a friends’ loan does not go well is around 1 in 3, but of course more factors play a role.
Do you still want to lend money to friends? Then think about it again. Make sure you know the person well, he / she is in your immediate area and you are sure that he / she can be trusted. Borrowing money can cause many problems, breaking friendships. Lending money to a friend, friends or family is therefore sometimes less convenient than just borrowing from a bank or company where you have to pay interest. Are you going to lend money to a friend, it is useful to make clear agreements. When it comes to € 20 it’s not such a problem, you’ll see that again. But if you just have to lend € 200 to someone, then you still have to think twice… What is the money needed for, do I still see it back, do I have to ask interest, when will I get my borrowed money back, etc etc. In short: many questions about lending money to friends.
Lend money to your children.
You can of course lend money to children, but watch out. Children often buy unnecessary things, have no income and do not know how to handle money. Making a declaration or taking other steps because you do not get a refund is not an option, so do not do it (unless it is family, then it is a different story). You naturally lend money to children without interest, but make sure you know what he / she needs. If he is going to use it to buy illegal products from for his / her age, you are responsible, because you have lent him the money. So don’t start; do not lend money to children.
Get the money back.
Yes, that is annoying. Lending money but not getting it back. It certainly happens. If the agreements are not clear or if you could not trust the person to whom you have lent money, you are pretty bad. If you do not get the money back on loan, you can make a declaration, but this will destroy your friendship. Sometimes it is necessary, if it concerns a (too) large amount, you have no other choice, there is nothing as annoying as lending money and not getting it back…
Suppose you have lent money (to friends / family), then you naturally want to (ever) see it again. Lending money to family is not such a problem. They are in your immediate environment and you can approach them directly, so you will not be scammed by your family. Lending money to friends, that’s a different story. No matter how well you are friends with someone, money is money, junk is junk. If someone has worked so deeply into trouble and needs your money to get out of it again, you will have lost your loaned money. So make sure you know what he / she will use it for, especially if it concerns a large loan amount. If the amount is too large, do not agree. Lending too much money is not handy, no matter how much you have.
Borrowed money is not paid back, what now?
It is – of course – very annoying if your borrowed money is not repaid. Borrowing money is done in the confidence that it will be paid back to you. If this is not done, your confidence is seriously compromised. But what should you do if you don’t get your money back that you lent? If you do not get the money back on loan, you must first moan until you do. Find out why you don’t get it, why it’s not on time. Is he able to give it within a year? If not: clearly agree on things. If you do not receive an answer and you are ignored, consider legal action. Consider a declaration, especially if it concerns a high amount of money.
Be careful with things like this. If he does not pay back the money, chances are that he is very friendly and understanding. When you threaten to make a declaration, a number of stops can break and nasty things happen. So be careful when threatening things, make sure you keep everything under control and don’t panic, no matter how big the amount is. Collect all the evidence that you have, paper, emails. Is it worth it? If it is (but) about <€ 100 it is better to go after it yourself by nagging. Calling in a legal office costs almost more than € 100, so it is no use to you.
It is a very unpleasant situation when you do not get a loan back. Consult with parents, other friends and family about what you can do best now. Don’t fight, solve this in the right way, otherwise more problems can follow. Make sure you stay calm and come up with a solution where you simply get your money back. Good luck!