lending to friends, page-9

No such thing as lending money to friends...

Because once you do, chances are they will not be your friends for much longer!

By all means give your friend the money they need...even ask them to repay it when they can (with interest, etc...if this is what you want)...but in my mind, you should only lend money to friends not expecting to get it back any time soon.

If the sums are small, getting the money back or not should not be a big deal (if they are a true friend)...if however the sums are large, you should not be entering into such arrangements in the first place.

It may be a sad reality, but money often puts pressure on the slightest cracks that exist in all relationship (with friends in particular), which can be stressed to breaking point on the back of changing dynamics that often appear when a financial commitment exists between people.

Some friends can cope...most cannot.

In my case, settlement of a property (bought from an extended family member), was delayed by a month due to the delayed settlement of my own property (sold to another party), on the back of complexities with the release of funds from the buyers superannuation account.

The money was there...and payment was always going to happen...but a delay ensued...for me it was a non-issue, especially given penalty interest charges were being applied to both settlements, at rates well above bank interest!

These things happen...but for our "extended family member", it was like some pent-up demon was released and he became quite irate about the situation.

What made things worse is that we were doing him a favour in buying his property off him in the first place, without the need for agents fees, etc!

In the end, we paid him twice the penalty interest charges, just to try to appease him...but it made little difference to his attitude.

This was the absolute last thing we would have expected from this person, who had never shown signs of such unsophisticated behaviour before...I guess never having been involved financially with this person before, we had little warning.

Fortunately, the angst was relatively short-lived, and the "relationship" eventually cooled down to where it was prior to the event...but, suffice to say we will never get involved with this person financially again!

I think there are better ways to help people out...

If the amount is small..."give" them the money. If they are a true friend they will pay it back, if they are not, then you should not be giving them money to start with.

If however the sums are large, perhaps you could act as "guarantor" on a loan...this way the friend in question can borrow the money him/her self from a bank?

In this scenario, you facilitate the friends access to money, but you have introduced an important level of separation (via the bank), should things go wrong.

Good luck withwhat ever you do...it is always nice to help a friend in need!

Cheers!