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Crest And Co

4. It Can Make It Awkward for Family and Friends

4. It Can Make It Awkward for Family and Friends

The tension between you and the borrower e, and remorse. All of that can permanently damage your relationship, whether or not they eventually pay off the loan.

If you’ve already lent money to a loved one, discuss potential issues before things go south. For example, talk about:

  • The loan terms
  • What you will do to avoid potential relationship issues
  • What each of your expectations and obligations are
  • How you will handle any problems that arise
  • The risks associated with lending money to loved ones

If you and the borrower get to a point that the loan affects your relationship, it will be noticeably awkward for everyone around you. Disagreements can lead to drama, and your mutual acquaintances may feel obligated to choose sides.

It could also mean you speak and interact with each other less or avoid attending the same events altogether. That can affect your friends or family members, who may feel they have to make special arrangements for events to work around your feud.

If you’ve already reached the point that a loan you made to a loved one is affecting your relationship, go out of your way to keep one or both of you from being disinvited to group events. Steer all conversations away from money and choose the right time and place to discuss your personal issues.

5. The Borrower May Feel Obligated to the Lender

When people borrow money from a bank or financial institution, they feel obligated to repay the loan, but it’s purely financial. 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.

Sometimes, people unintentionally (or even intentionally) manipulate friends or family members they loan money to when the borrower can’t pay them back.

For example, they may attempt to control a borrower’s spending or expect them to take on extra tasks and responsibilities until they’ve repaid the debt. In these situations, it’s hard for a borrower to refuse, putting them in a difficult position.

If you lend money to a friend or family member, be conscious of the moral obligation they feel to you, and don’t take advantage of their situation payday loans in Defiance. Although they may owe you money, you don’t have a right to expect them to do whatever you ask.

6. The Borrower May Ask for More

If you agree to lend money to a loved one once, you can do it again. At least, that’s how a borrower may feel.

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.

If a borrower knows you have money you’re willing to share, there’s a chance they may attempt to use you as a personal bank account. 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.

If a borrower requests an additional loan, it’s best to refuse (politely). 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.

7. It Enables the Borrower’s Bad Financial Habits

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.