Should You Lend Money to a FRIEND?

Last updated on February 6th, 2025 at 05:56 pm

From time-to-time, someone you know may fall under a dark cloud, and may be experiencing a money crunch, and inevitably may turn to you for some financial help.

Should you lend this person the money they say they need?

The answer to this question is, as with many other questions, it depends.

Answering the following checklist of questions for yourself may help you to decide on whether you should lend this person, or for that matter, any other person, money or not.

After answering the following questions, if you feel comfortable with the answers, then you may give yourself the GREEN LIGHT and give your friend the personal loan.

If however you are not comfortable with the answers, then flash the BIG RED LIGHT and respectfully say… ‘Sorry, I just don’t have the money to lend you right now’.

OK… let’s get some answers…

• Does this person have the means to pay you back?
• Do you TRUST this person to pay you back?
• Is this person willing to sign a loan agreement?
• Is this person willing to offer collateral to secure the loan?
• What other financial responsibilities does this person have?
• What is the money going to be used for?
• Has this person tried a financial institution to borrow the money?
• Are you willing to lose the money?
• Can you afford to lose this money?

Answer these questions honestly and your decision, as to whether you should lend this person any money, should be clear.

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