When a family member or a friend approaches you for financial help, the $64 question that will run through your mind is: should you lend or shouldn’t you?
More often than not people who lend money often run the risk of straining a relationship simply because the other party has trouble paying back. So what are you to do?
Here are some ways to discern and to determine when is it smart to lend money to a friend or relative while protecting your relationship in the process.
Decide how important repayment is to you.
When you loan to a friend or a family member, there is a big chance that you won’t get paid back. According to a study by a Consumer Card Service in the United Kingdom, 18 percent has debts to relatives and friends – a total amount of £3,530. Decide right then and there if the money or the relationship is more important to you. If your friend or relative cannot pay, then treat the money as your help to that person. After all, the Bible says it clearly in Psalm 37:21, “The wicked borrows but does not pay back, but the righteous is generous and gives.”
Put it in writing.
For large amounts, it is prudent to put it in writing. State when and how your friend or family member is going to pay the money. Will they repay this on an installment basis? If so, when? Would it be every quarter or every month? And how much? Place the exact date if possible. You can have this agreement notarized if you prefer.
Think of it as a gift.
If your friend or family member still can’t pay, treat the money as a gift. The Bible states it plainly that the Lord loves a cheerful giver (Paul is talking about giving to the Lord, of course) but to add to that, it is the Lord who will repay you back as stated in Proverbs 19:17, “Whoever is generous to the poor lends to the Lord, and he will repay him for his deed.”
Talk about other choices.
You are there to help your friend or family member, of course. Sometimes money may seem to be the solution to the problem but truth be told, the answers may just be more than that.
Lending money is also about being responsible especially when dealing with someone close to you. When such situation happens, be firm and resolute. If you don’t have money to lend, say so and be upright. If you do have extra funds, be firm on when your friend needs to pay you back.
Open the communication lines.
When you do decide to lend money, ask from time to time how he or she is doing. Make sure that there is constant communication with the both of your to ensure transparency and accountability. This is also to make the other party aware that the loan is at the top of your mind, so to speak.
Don’t charge interest.
There are specific laws in the Scriptures that allow the Israelites to charge interests on their brethren but during the time of Jesus Christ, He specifically says to help your fellowmen by doing more than what is necessary (Matthew 5:41). Although the context is not about money, the poignant scene shows how much Jesus takes pride in relationships – and you should too.
The Bible talks about money more than faith and prayer and for a good reason too: because money may make the hearts of people stray as the Scriptures say that the love of money is the root of all evil. Keep in mind that in all decisions, there is always a risk involved and when you decide to loan to a friend or relative, a potential for damage to relationships can happen – but do what is right and do what is according to God’s Word.