Lending money?

Question

A friend asked me to lend her some money. She needed $2K urgently and promise to return me after she sold her flat in 3 mths' time (Aug'07). Meanwhile she will return me $200 each month on her pay day. Would you lend her the money? Is there any way to make sure she return me the money I lend her.

Answer 1

I hate lending people money cause they never pay me back. BASTARDS!!

Answer 2

DON'T DO IT!

I have learned my lesson more than once. They never pay you back when they say they will, if at all. Unless you're willing to consider the 2k a gift to her, don't loan it to her.
She should ask her parents. I know it'll be hard telling her no, but if someone would have just sat me down and told that to me, I wouldn't be out over $3k in loans.

BUT if you are guilt tripped in to loaning her the money, right up a small contract, doesn't have to be anything fancy. Just something simple that says:

On ________ 2007 ____her name____ is borrowing two thousand dollars ($2000) from __your name____. Repayment will be in the amount of two hundred ($200) until full payment has been recieved on August 1, 2007.

Then take it to the bank or grocery store and have it notorized as you both sign it in front of her. It's simple and to the point and helps you in the long run. TRUST ME.
Also, do not give her cash, give her a check and in the memo box write "Loan / To be Paid back in full by Aug 07"

That way when she doesn't pay you back (which she won't she'll start making excuses) you can take her to small claims court and have proof of the loan.

But take it from someone who's been there, just tell her your sorry and don't have the money. She'll be pissed but it's not your responsibility to get her out of debt. She should have planned her finances better.

Answer 3

You need to ask yourself a few questions.
How long have you known her?
Are you familiar enough with this person to know her usual state of financial stability?
Is she normally on top of her game,and has just had the bad luck to come into some sudden and unusual predicament? Or is she known for constantly being just shy of her needs for some reason or another?
What is her employment situation?
Does she have a long-time job with good pay? Or is she regularly submitting resumes during her lunch breaks from some mediocre job that she says is "just for now"?
You are obviously having second thoughts about this decision,or you wouldn't be posting this question.Follow your gut feeling.
If you do decide to lend her the money then you might want to get the agreement in writing with both of your signatures.
If she's the trust-worthy type that has her affairs in order then she'll understand your request.If she balks then you might want to rethink this.

Answer 4

Never lend money that you are not prepared to give away.
If you lend her the money and the debt becomes uncollectible, you are entitled to deduct the loss as a Non business Bad Debt on schedule D of your Form 1040 as a short-term capital loss on you 2007 taxes.

Answer 5

I would not do it.

Before you get angry with me for not being sympathetic, consider this...

1) If she really had the means to pay it back, a bank or credit card company would be able to provide her with the loan.

2) Even if she truly intends to pay you back, you have to face the likelihood that she either might not be able to or might not be willing to once her immediate financial crisis has passed.

3) It will change your friendship. Even if she pays you back the $200 every payday, it will effect your friendship. Every time she sees you, she will think of how much she owes you.

A very wise person once told me, if you really want to help, and are in a position to, GIVE them the money. Don't ever LOAN it to them. It just creates negativity in the relationship. If you loan it to her when the bank won't, you're already taking the risk that you might not get it back. Why not preserve the relationship and GIVE her the money? If you can't afford to give it to her, then you really can't afford to loan it to her either.

Good luck with your decision.

Answer 6

I would not lend that much money, but if you were to the best way is to meet with an attorney and set up a contract. It will cost you a fee, but you could set it up so she would cover that as well. It would be a legally binding document and you could go back on that if she stiffed you.

Answer 7

No, the only way you would be sure she'd return the money is to either do this legally (papers and signatures)
However, if you are really good friends with this person and believe you know her very well and her personality, then I don't think there will be a problem with it.
Just a matter of trust.

Answer 8

I would have an attorney draw up a contract and you both sign it in front of a notary public. I would also have the attorney put in that she pays all attorney fees for the agreement and any court fees if you have to sue her. If she really wants the money she will agree, plus she'll be more likely to pay you back on time if there's a signed agreement!

Answer 9

Dont lend it. She may not return it and that could ruin your friendship. Just tell her you dont have that kind of money to spare.

Answer 10

Have her apply for a loan at the bank and then you secure the loan with the 2K. This way, it'll hurt her credit report if she doesn't pay and it'll help her build some credit if she does pay.