Factors to consider before lending out money to people.

[Etini]

No matter how we may try to avoid, it gets to a certain point where you can't help but lend money to people as people might come to ask for financial help from you. These are some factors that you should consider before you decide to lend money to anyone.

1) Their credit history with you and other people: Even when you can't access their credit score because you lending the person money is informal, you can reference their credit history with you and other people you mutually know to make the decision to lend money to the person or not.

2) Their source of income and financial stability: Is that person financially stable with a good source of income that he can use to pay back the money you would lend him or her.

3) The purpose of the loan: If the money the person wants you to lend him or her is for something vital, needful or productive, you should go ahead and lend the funds.

 

[Holicent]

There are so many things you should do before you lend people money, especially when you don't have any intention of letting it go, for instance if you do it for business. You should find out such individual or business credit score history. Some people go here and there just to accumulate loan without any intention of paying back. You should make sure you get every vital information about the person in such that even without physical presence of the defaulter, judgment can be made.

 

[btaliat]

Before I borrow people money, I always consider some factors personally. And most times, I will make sure I only lend out the money that I know that it won't affect me. This is because money at times can be a very delicate issue that can cause fight or rift easily.

The first thing to consider is the fact that we need to make sure that the person is working. This will facilitate the easily payment of such a debt. Their reputation as well should be checked. There are some people that will have but won't just repay.

 

[Phantasm]

These are the factors that you may want to consider when lending money to individuals; the credit rating of the borrower, his/her salary stability, purpose of borrowing, terms and conditions of lending, risk evaluation and collateral. Therefore when making major lending decisions it is important that these factors be examined carefully for effective risk management while simultaneously safeguarding one’s financial interests.

You should ensure you comply with relevant laws. Communicate well with your borrowers regarding all aspects involved with loans. Determine the financial effect and options on hand. Reliability and track record should be considered. Decide wisely to reduce risks in order to promote responsible lending.

 

[btaliat]

The economical situation of the time should also be considered. There are some good time for lending people money while some times are not really a good time for lending people money. Some of the time that are not good for lending would be during inflation.

During inflation, the lender losses the more compare to the borrowers. The borrowers will pay at fixed interest and by that time, inflation may have eaten deep into the value of the money, hereby making the money not valuable any longer even after getting the interest