how to make sure if your friend borrow your money he/she will pay back?

Question

my best friend want to borrow a few thousands from me.
I want to help him but I afraid if anything bad happend I couldn't get the money back.
Should I put it black and white?
Should I hire a lawyer?
In case he/she run away if I report it to police will they take action of my report?

Answer 1

Tens? its ok... Hundreds? 'fine'... but by the thousands, I really suggest you do some serious thinking on this, man.

First of all, a 'best friend' could mean nothing more when money is being involved... a best friend is whom most people lose their money too...

I don't want to make any comments which could discourage you on this. He/she is your friend and you should be able to evaluate his/her personal outcome on this. Try working out on a scheme on repayment.

MOST people tend to run away because of not being able to fulfill their repayment on time or so. Some are not even able to repay at the amount promised...

Personally, I'd say, discuss this with reason. Don't go by 'best friend' reason when it comes to money issues... best friends are just an excuse for most people to tap into our pockets...

Answer 2

First rule of thumb...don't lend money to friends. Because this person is a friend they may think that it's okay to pay you back a little here and a little there. With a bank or other loan company it is a contract that can effect credit so therefore a person takes the loan more seriously. When a friend borrows from a friend there is no feeling of urgency to pay it back because the person is a friend and "they'll understand". If this person is in a situation where they need to borrow the money in the first place then what is that saying? First, they don't have the money to begin with hence the need to borrow. Two, if they don't have it now then why would you think they'll have it two weeks or months from now? I absolutely understand the fact that you want to help your friend out but I say it's a bad idea. Many people have lost friends over situations like this. Now, if you have already decided to lend the money and there is no talking you out of it then you should definitely draw up some sort of contract and have it notorized just in case you have trouble getting the money back. Make sure that in the document everything is spelled out for your friend. Come up with either a date that all of the money needs to be repaid by and/or a payment schedule. Whatever you decide...good luck!!!

Answer 3

2

Answer 4

(1) NEVER give money in a greater amount that would hurt you if you never saw again. You will hurt yourself, your friend, and your friendship. No amount of money is worth the pain and suffering that causes. Either give freely or not at all.

(2) If your friend has a possession, such as a new car (not used) or a $5000 diamond ring that you have evaluated in advance by a professional yourself, that if you sold it you could get all or more of the money back without risk, then buy it and document a legal agreement in writing, of your ownership before lending the money, and that if the money is not paid back in full by a certain date, you will sell it and keep the difference. Jewelry has to be professionally evaluated, as with used cars that are not able to sell at appraised value. You may get stuck donating it to charity and writing the value off your itemized taxes, but only a percentage is deductible.

(3) Note: I would only recommend using collateral on smaller loans. For a "few thousand" I would not recommend a loan at all. The only exception is if you are "investing" in a business venture where you can afford to throw away the money if it fails to pay off, and will not have hard feelings about it.

(4) Again, if you will regret it, if you have conditions or fears, then DON'T. Your friend can borrow from a bank or credit card. If your friend is in such trouble to ask you for a "few thousand" then garnishing wages is not reliable. What is your friend trying to pay for beyond current means? That should also give you a big clue this is not a good idea!
Anyone who is reliable and credit worthy enough to lend that money, could get it elsewhere instead of from you. You are not a bank. Do not lend it unless you can flush the money down the toilet and not care or regret it. Only for good causes, where you do it for the sake of giving, it is worth to give the money away. If your condition is to be paid back, then forget it. Even with business and law, that is no guarantee!

Answer 5

Money between friends is the fastest way to make enemies.

If it is is a clear cut case of where the borrower needs the money for perhaps a week because of perhaps a bank transfer, then get it in writing and if possible see that there is collateral.

Friends shouldn't mind that things are clearcut and black & white. Otherwise, if your friend is hurting, give him a small monetary gift that you can outright afford to give.

For small change <$100 if a person doesn't pay back and starts avoiding you, maybe that is a cheap way to find out what a person is made of so as to avoid a long relationship.

Getting money back the hard way never fun.

My wise father once told me, "if you cannot afford to lose it -- don't lend it out."

Answer 6

This one is easy, NEVER LOAN ANYONE MORE MONEY THAN YOU CAN AFFORD TO LOSE.
Time and time again I have loaned money to people never to see it again. My philosophy now is that I won't lend more than I would be willing to just give as a gift to help a Friend in need.
If you look at each and every gift of finances as just that, you will never be disappointed. If they do pay you back, than it is just an unexpected but pleasant surprise.
Of course you don't tell them you don't expect to get it back, you just go into the deal with eyes wide open, knowing that there is a good possibility you'll never see that money again, but since you only lent what you would gladly give to help a buddy out, you're totally cool with it.

Answer 7

Best to avoid these situations. I might lend a friend up to $100, no more, that way if I never see it again oh well, then I've also learned something about that friend.

I would want to know the situation first - how dire is it (really - not what the person thinks)? Is there something your friend can give you as collateral? This shouldn't be offensive to your friend - if I was truly desperate I would offer something as collateral to borrow that much money.

Better yet - is there something you can do to alleviate the need? If its for a car repair, for example, offer to drive your friend to work (if feasable) until they save up enough to pay it themselves.

Answer 8

I was with a credit collection agency. Friendly loan is the most difficult debt to recover. As there is no black and write, and there are alway dispute over the amount even the person willing to pay.

A lot of people may find it weird to ask a friend to sign an IOU for friendly loan, you should make clear with him that you don't want money to affect your relationship with him, thus it's better to put into black and white. I don't think there is a need to hire a lawyer for few thousands loan.

Alternately if you don't want to put it into black and white, ask the person to issue you with posted dated cheques on the day where the person think he is able to pay you back.

Answer 9

Since it is your best friend, then trust him or her. After all friendship isn't easy to come and you should treasure it, hence if you voice out your thoughts of him or her stealing your money, I am afraid this friendship shall be lost forever. I think you should be able to get your money back after all I do believe the good in people more than the bad. Never put it in black and white nor hire a lawyer. I believe she will not run away so there is no need to worry whether you will even have to report the case, which obviously will never happen , to the police.

Answer 10

If you need to spend money to recover the loan (interest-free?) it's better not to make the loan. This being a private agreement (verbal or documented) the police has nothing to do with it.

Even if you have the court's judgement, enforcement is difficult when the borrower is incapable of paying up.

If the person is not gainfully employed, don't make the loan. Unless of course you can afford it. Meaning: the loan amount does not make much difference to making your ends meet monthly. Are you in that kind of position?

Answer 11

Every time I've lent money to a friend, I've been burned.. Its not worth it..

You have to say no... or if you do lend him the money.. have no expectations of ever getting it back.. and be okay with that if you can.

I once lent my cousin 1000 to get to Alaska to start a new life. It was the best 1000 i ever lent. He is out of my life, I know that sounds cruel, but he is a mess and took too much away from my life and my families when he was here. He's back in town, but avoids me now because he owes me money. I lent my roomate 500 and she forgot about it.. When we had a fight it came up and she said she would pay me backk.. never happened.. I've written it off and learned a lesson from this.. It was an expensive lesson, but I won't forget it.. Do Not Lend Money to Friends if you want them to continue to be your friends....

Its not worth lending friends money.....