What happens if you lent

Steer all conversations away from money and choose the right time and place to discuss your personal issues. When they borrow money from a loved one, they often feel a moral and emotional obligation to that person because the lender helped them out of a tight spot. If you agree to lend money to a loved one once, you can do it again. An initial loan to help with a debt or purchase may not seem like a big deal.

But just as a lender can take advantage of a borrower, a borrower can take advantage of a lender. You become a safety net to fall back on when they run into issues with their finances. And it means their debt to you is constantly increasing, just as your savings account is decreasing.

Offer to help them in other ways, like developing a personal budget or coming up with alternative options for whatever they wanted to use the loan toward. For example, suggest a public transit pass in lieu of a new vehicle. If a borrower knows they can run to you for financial support every time they run into budgeting dilemmas, it gives them an easy way out of dealing with their financial issues.

Instead of learning to manage their own money problems , like repaying student loans or managing credit card debt , they rely on borrowed money from you to tide them over. Instead, it sets them up for even more potential pitfalls in the future. When a loved one asks you for a loan to pay off a debt or make a purchase, try to determine the real issue. For example, could mapping out a monthly budget enable them to pay their own bills?

If so, instead of handing over cash, help them plan their monthly spending and teach them how to become more financially independent. That helps them long term as opposed to giving them money, which will likely end up as a Band-Aid solution to poor spending habits or lack of budgeting.

That means they have less motivation to pay you back. And while the amount may have been meager, it still would have been something. If you lend money to a loved one, include an interest rate in your agreement. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Lending money to family and friends can be a gesture of goodwill when someone you know is in a tight spot financially, but it can be problematic if your efforts to help lead to disagreements or you experience financial issues as a result.

There are certain situations in which a friend or family member might approach you to borrow money. For example, you might be asked for a loan if they:. Limiting loans to friends or family members you trust to pay back what they owe can help you avoid financial and emotional headaches later. In the Lending Tree survey, for example, nearly a third of borrowers and lenders reported negative consequences, including resentment and hurt feelings. Making a large loan to help someone out is a bad idea if it puts the squeeze on your own finances.

When deciding how much to lend to someone, a good way to frame it is to think of the money as a gift. In other words, how much money could you lose without it hurting you financially? When making a loan to friends or family, having a paper trail can help you avoid misunderstandings. Drawing up a loan contract that you and the borrower agree to and sign makes it clear what your responsibilities are, and it gives you grounds for legal recourse if you end up needing to sue them later to get your money back.

At a minimum, your loan contract should include:. For larger loan amounts, it may be wise to have an attorney draw up a contract for you. You may also want to talk to a tax professional if you plan to charge interest on the loan. It is relatively rare for friends or relatives to draw up loan documentation between them. Legally speaking, however, it is advisable to draft some form of documentation for any loans you make, no matter how informal. Documents like this act as a record of your intentions and set out exactly what terms have been agreed.

Doing so can avoid legal disputes in future. To avoid such difficulties happening to your loved ones when you pass away, you can specify in your Will that certain loans you may have made do not have to be repaid. For more information about inheritance tax, have a look at our factsheets.

You could also make mention of outstanding loans in your Will that you specifically wish to be repaid. This can give clarity to your executors as to your intentions. You may also instruct your personal representatives to take any outstanding loans into account before they divide up the estate.

If you would like advice about anything discussed in this article, speak with a member of the team. Buying a property is a huge undertaking. Whether clients are purchasing their very first home or are already very experienced in the matter, conveyancing solicitors…. During Lent, many people decide to give something up that they love - perhaps chocolate, sweets or even using social media. Others might decide to take up something, like helping out more at home or making an effort to be nicer to their brother or sister.

Lent is a period of 40 days during which Christians remember the events leading up to and including the death of Jesus Christ, whose life and teachings are the foundation of Christianity.

The day period is called Lent after an old English word meaning 'lengthen'. This is because of the time of year when it happens, as this is when the days start to get longer, as we approach Summer. It is a time of reflection and of asking for forgiveness, and when Christians prepare to celebrate Jesus's resurrection at the feast of Easter, which comes at the very end of Lent. On Ash Wednesday, churches hold special services, at which worshippers are marked with ash.

This is a symbol of death and remembering bad things that we have done, and is where the day gets its name from.