Loans taken within your family is a bit tricky. Even if the reasons are as legitimate as it can be, the question of “how much?” will always be a fact to consider, how giving such kinds of loan will affect you financial budget and plans, and how you and your family would react or certain ramifications should your relative be unable to repay you. Big question marks right? Well to get those marks out of your head, here are a collection of tips for lending money to a member of your family.
1. Listen to them. Give time and allow your relative to explain their situations and why they wanted to borrow such amount. Also take into consideration and ask how immediate their need of the money is and what they will be paying or using it from exactly. While it will not be in your intentions to make them feel that you are somewhat interrogating them for the lack of trust, it is very important for you to feel that the money loaned will be of good use and not in any other way.
2. Take a close look at your source. As much as possible, examine and consider your relationship with the family member that’s asking you for a loan. If you don’t happen to be close, ask yourself why he/she have come to know you and ask you for the loan. If you happen to be close to your relative though, it might be best to consider if he/she have borrowed an amount in the past and compare it with how responsible and reliable they are in repaying in the past, whether to you or someone close with both of you as well.
3. And here’s a very important suggestion. Always check your finances first. Before ever having your family relative borrow money from you, think about how it will affect you and your family financially. Even if the said amount may not be that big, ask yourself if it will in any way affect your financial budget or plans you may have for future use. If for after a close look, you see that it will, explain this to your relative and let them consider some other option, or lend them a partial amount of what they are hoping to borrow or have them contact another family member.
4. Like any other contract or arrangement, put it into writing. When you’ve already reached an arrangement, write every detail of your arrangements. And like any other contracts also, both of you should have a signature along with the date of the contract to signify that both of you had agreed to the arrangements and terms that both of you have agreed upon. Include the amount, the payment terms, and the purpose of the loan. This will help both of you to be honest and relaxed about the loan situation until its fully paid off..
5. Family is family, but it is best to be firm as well. Once the due date of the loan has come, take a stand about being paid. Should repayment be an issue, don’t hesitate to remind your relative about your agreed terms. Being soft and allowing yourself to be taken advantage of in these types of situations will also give a hint on your other less honest relatives that you are east to be taken advantage of, so be firm about getting paid with the money loaned to you.