In Lending Money, You Need To Be Cautious

There are times that a friend or a close relative borrows money from you, what you shall do? Well, if it involved a considerable amount of money, or whatever purpose it may be, the first practical thing to do is, you have to be cautious.

If you have the amount, don’t give the person an idea that you have the money with you. Listen intently to what the person has to say why he or she needed the money in the first place.

You have to treat lending in various different perspective and it shall be dependent with all its intent and purpose, so that you can be able to address of each properly.

1.0 If it is an emergency case, involving life and death scenario, you need first to evaluate yourself of how far you can be generous to this kind of situation.

Well it’s a noble thing to help, but you need to consider foremost to yourself, by either lending that person the money of what you can only afford or providing the person the full help. It is alright as long you don’t feel that burden of proof of a “heavy heart” in extending the help.

That “heavy heart” feeling, is the limit of what you can afford to lend the person without jeopardizing your own personal finances.

It is a yardstick to your willingness and yet it serves as a “ring your bell” to yourself not to overdo things for your own benefit. It is something that you would not want to regret it later. It is better to treat whatever you doled out to that person as a charity rather than a loan.

Much better if you can suggest to that person, that if his of her financial situation improves in the future, you will be glad to get a present that would equal the money you lent to them.

2.0 If the money that the person intended to borrow is for business purposes, you can be of help to the person referring him or her to a lending institution or a credit loan cooperative where the rates are not exorbitant rather shelling out your own money.

If he is not qualified, for whatever reason, so be it. You don’t have to get entangled to things that shall bother you later on. Be frank and straightforward in your dealings with the person.

If the person suggested otherwise to borrow, learn to say no, if you have some second thoughts of what he is venturing, tell him the reason why, maybe your thoughts would serve as an eyeopener to the person, not to continue his or her plan.

Never hesitate to refuse someone if the situation involves too many risks. Search for other helping options for that person. Conduct the conversation in such a manner that your friend or your close relative will understand why you are refusing the request not the person that made it.

3.0 If you have known the person is about to engage a profitable niche, that you readily decided to extend the loan, it is better to let that person sign a written loan contract for your security and safety.

When you are about to give away significant amounts of money, sign, each of you, a contract that settles the conditions and the return date of the money and reflect the total loan amount in the document. Notarized the document by a lawyer to make it legally binding and official.


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