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Usually a terrible idea.
Possible exceptions would be if someone is in your peer group and you’re close enough to them to truly know their circumstances and that they are a competent person who faced a series of highly unlikely events that created a temporary liquidity issue with a clear exit path to paying you off, and ideally some security collateral and a written contract.
However, be especially wary or loaning money to people you used to be really close to but have maybe drifted away from. You’ll be shocked at how someone who used to have it together in high school or college no longer has it together at all and is hiding a drug addiction or something similar from the world. And you’ll also be shocked at how people can justify not feeling guilty about not paying you back because you’re doing better than they are financially.
It is rarely the case that you are the most logical lender for someone who actually has the capacity to pay you back. It can be the case if it’s a short term loan in unique circumstances and them dealing with a traditional lender would simply take too much time.
Source: personal experiences
My rule of thumb is, don't lend money to someone that you wouldn't be comfortable giving to them as a gift. Because chances are, you won't see that money again. Depends on the person of course. I try to assume positive intent and see the good in others.
Just don’t do it. Make your life easy for yourself.
No personal experience with this myself, but here is what I’ve heard to keep strong relationships with someone when you lend them money:
Never make it a loan that requires repayment. Make it a gift. 100% theirs, no repayment/interest or anything. Just free money. Do it ONLY on the condition that they will NEVER ask you for money again.
All of this assumes you are very close to this person or trust them enough in the first place. They have to know that you will be kind, but you won’t be taken advantage of.
Once again, not my personal experience but this might help moving forward.
Solid advice, great share
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No.
PBD has a good perspective on this. If family asks to borrow money, give it to them; not as a loan, but as a gift which they can pay back if they want. I think this applies to non family as well.
I personally donate a little bit here and there but mostly laying the foundation of my finances rn
No.
But if you do, be prepared that they may never pay you back, and actually ghost you (thus losing that friendship). Has happened to me in the past.
“Do people ever ask you for money? Does it damage your relationship? Will someone asking for money always be broke?“
Yes. No. No.
You’re welcome :)
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