Yusra3
VIP Contributor
Lending money to loved ones can strain relationships if they fail to repay you as agreed. To avoid awkwardness or resentment, be proactive about setting expectations and terms upfront.
Before disbursing funds, draft a simple loan agreement detailing the amount borrowed, repayment schedule, interest rate (if any), late payment penalties, and both parties' signatures. Make it clear this is a real loan, not a gift.
Politely follow up on missed payments with a reminder of what's owed per the agreement. Avoid emotional pleas - stick to facts. Propose an adjusted repayment plan if circumstances have changed for the borrower.
As a last resort, you may need to take formal legal action by taking the individual to small claims court over larger unpaid amounts. However, this scorched-earth approach usually damages the relationship beyond repair.
The better solution is preventing issues upfront - screening borrowers carefully, setting firm terms, and not extending more credit than you can afford to risk straining valued bonds over..
Before disbursing funds, draft a simple loan agreement detailing the amount borrowed, repayment schedule, interest rate (if any), late payment penalties, and both parties' signatures. Make it clear this is a real loan, not a gift.
Politely follow up on missed payments with a reminder of what's owed per the agreement. Avoid emotional pleas - stick to facts. Propose an adjusted repayment plan if circumstances have changed for the borrower.
As a last resort, you may need to take formal legal action by taking the individual to small claims court over larger unpaid amounts. However, this scorched-earth approach usually damages the relationship beyond repair.
The better solution is preventing issues upfront - screening borrowers carefully, setting firm terms, and not extending more credit than you can afford to risk straining valued bonds over..
