I Have Money to Loan
December 9, 2012 Information
If you have money that you would like to loan out, you need to find someone you can loan your money to. Of course, that shouldn’t be difficult since so many people are in need of money, but when you loan money with the intention of seeing it return to you, it is important that you first determine whether the person is trustworthy.
If you loan to someone you know, the advantage is that you are already aware of their character, so you have that to go on. You also most likely know where to find them to demand payment. However, it is generally considered a bad idea to loan money to close friends and relatives. Because they know you, they may feel lax about paying you back, which can lead to bitterness on your part, and in the end, you may not get repaid in full and a friendship may be forever tarnished.
If you do lend to a friend, however, you should use the same sort of caution you would loaning to a stranger. Write up a contract that clearly outlines when payments are due and how much needs to be paid on those occasions. Agree on how much interest will be paid on top of the loan. It needs to all be written down and signed by both of you so that there are fewer opportunities for later disagreement. Get it notarized as well, and make sure that if you go too long without receiving a payment, you send a notice.
If your intentions are purely altruistic, it’s best to simply give money with no expectation of return. If, however, you want to be sure of getting that money back, you need to be proactive to make sure that the person with your money does not take advantage of you.