Zirtue | Lend & Borrow Money with Friends and Family (2024)

FAQs

What is a good excuse to borrow money from friends? ›

A few emergency reasons to borrow money could include debt consolidation, car or home repairs, medical bills, moving costs, or a large necessary purchase.

DON'T EXPLAIN OR MAKE EXCUSES.

When you say no, don't offer explanations or excuses. Doing so only opens the door to a discussion and prompts your friend or family member to try to overcome your objections. Say, “I'm sorry, but I can't give you a loan.” When the person asks, “Why not?” just repeat your statement.

Potential for conflict: If the loan isn't repaid or the terms of the agreement are broken, it can strain a relationship. The family member or friend loaning the money must consider the chances of not getting it back and whether the loan will impact their own financial goals.

If you don't want to use "will" or "can," you can also use just a simple "please" statement. This is not a question but, "Please lend me," something, something, something. "Please lend me your car.

Disadvantages of raising finance from friends or family

there is a risk your investors may offer more than they can afford to lose, or that they will demand their money back when it suits them but not your business. they may also want to get more involved in the business, which may not be appropriate.

When lending money, a written Loan Agreement or Promissory Note is your best friend. Even if you're loaning money to a friend or family member, it's always a good idea to create a written contract rather than rely on a verbal agreement. Some people lend money in good faith without putting pen to paper.

Explain. When you say no, briefly explain why. This can be as simple as “I have a policy not to lend to family and friends to keep our relationship strong,” or “I cannot afford to lend the money as I need to prioritise my children's needs.” Be careful of leaving the door open when you give your reason for saying no.

- Just say “No, I don't have any disposable income at the moment.” Or “No, I don't tend to lend money to anyone and especially not to thouse I barely know.”

Be clear on how much money you're willing to gift or lend. If you're not comfortable being a revolving piggy bank, let your relative know you're willing to help them one time, then they need to find another option. Say, “I am willing to help you; however, I don't want this to happen regularly.

Am I obligated to lend money to friends and family? ›

Don't Be Afraid to Say NO

You're under no obligation to give anyone — besides the government and your own creditors, of course — a dime of your hard-earned money. If you don't feel comfortable lending money to a friend or family member, just say no. They'll get over it.

Key Takeaways. Lending money to friends and family can lead to financial problems for you and potentially cause relationship damage. Creating boundaries for loans to friends and family can help preserve relationships and minimize the potential for problems.

He suggests putting everything in your written agreement, including "the date of the loan, loan amount, repayment terms, interest rate, payment due dates and so forth." Diana Howard, a financial analyst at the coupon website CouponBirds, also recommends getting everything down in writing.

Just a simple promissory note." The document would ideally include the amount of money you lent, the date you lent it and expectations for a repayment schedule. "You're not necessarily going to enforce the document to the point of suing somebody," says Rossman.