This post may contain affiliate links, allowing us to earn a commission on the products we would recommend to our families and closest friends. You can find more info on our Legal Stuff page.
Many people will find themselves in a position where they’re considering giving someone a loan. They might be becoming a professional lender, or simply helping out a friend.
If you’re in either of these positions, you might be a little bit worried. There could be a decent amount of money involved. You’ll want to make sure that it’s protected.
You’ll also want to make sure that everything is fair, especially if you’re helping out a loved one. They would’ve put a lot of consideration into asking for a loan.
Finding that balance could be tricky. You’ll need to keep a few things in mind to stay safe when giving someone a loan.
Avoid The Hassle When Giving Someone A Loan
Only Lend What You Can Afford
Only lending what you can afford should be relatively obvious. You’d be surprised by how many people overlook this, however.
You’ll need to figure out exactly how much you can afford to lend. If it’s less than the person is asking for, then you mightn’t be able to help them.
Knowing your finances and budget will be a large part of this. Make sure you keep that in mind before making your decision.
Be Well Informed
You’ll need to be as informed as possible before giving someone a loan. If you’re doing so professionally, there are multiple resources available to you.
Many of these could be surprising, such as a credit podcast and other money-related software. Taking advantage of these is recommended.
You’ll also need to know as much as possible about why the person you’re giving the loan to needs it. When and how they plan on paying you back will also be vital.
Make Sure Everything’s In Writing
When you’re giving someone a loan, you’ll need to make sure that everything’s in writing. You’ll naturally do that if you’re lending professionally.
For friends and family, however, you might overlook this. You shouldn’t. To make sure that you and your money are safe, you’ll need to get everything in writing.
Doing so provides many other benefits too. It ensures that you and the person you’re lending money to are on the same page.
It outlines rights and responsibilities. That’ll make sure repayments are properly outlined and understood. You’ll want this in case the person you give the loan to defaults on it.
If you need to go the legal route to get your money back, this will be invaluable.
Staying Safe When Giving Someone A Loan: Wrapping Up
Giving someone a loan, be it either in a professional or personal capacity, can be risky. There’s always a chance you mightn’t get your money back.
You’ll need to do what you can to minimize this. That could be trickier than you’d want. It could end up making you some money, however.
If you’re helping out a friend, then that could still be true. You’ll also be helping them out of a tough situation.
It’s easy to see why you’re considering giving someone a loan. If you go ahead with it, keep the above in mind to make sure you’re safe.
Comments (0)