How To Handle Lending Money To Loved Ones

Lending money to a significant other, close friend or family member is an excellent way to hang a black cloud over your relationship, but sometimes it’s the only financial maneuver that makes sense. Be smart by treating the transaction just as formally as you would one with a financial institution.

Girls Just Wanna Have Funds delivers recommendations for arranging a personal loan with someone closed to you:

* Be willing to say “no” for no good reason. Just because you have the money doesn’t mean you’re compelled to loan it out. Only lend the money if it’s something you want to do, and don’t let yourself be manipulated.

* Don’t lend more than you can part with. If someone needs to come to you for money, it’s probably because banks don’t trust the person enough to front them the money. If you take the risk, be prepared to lose the bet and don’t lend money you’re counting on having at the ready.

* Make a contract. Include the date of the loan, when it’s expected to be paid off, the number and dollar amount of payments, late fees, and have both parties sign off. If the person you’re thinking about lending to bristles at the idea of a contract, don’t proceed with the loan.

Advice: Should You Lend Money To A Significant Other? [Girls Just Wanna Have Funds]


Edit Your Comment

  1. Bort says:

    unfortunately good manipulators have the skills to make the person giving the loan feel like if they follow these suggestions, they are bad people

    • axolotl says:

      My name is also Bort!

    • qwickone says:

      Don’t let them! The few times I’ve done this, I’ve prefaced it with “I consider this strictly business, so I’m writing up a contract to keep it that way.” You have the power if they are asking you for money, don’t forget that.

    • MeowMaximus says:

      Simple answer: No! Not ever! If you loan money to your relatives, you will never get it back, and they will end up hating you. Tell them to go to a Credit Union, Bank, or loan shark.

  2. Marlin says:

    yep rule1; never expect to get it back. If you do then thats a bonus.

    • nugatory says:


      Every loan I’ve given to family and good friends, I’ve done with the assumption on my side that its a gift. Of course that means I refuse to loan anything but small amounts.

    • sirwired says:

      Agreed. Don’t assume you’ll ever get it back. If you do, that’s just gravy. If you treat it like a loan, that way lies only estrangement, stress, arguments, division, and you still won’t get it back.

  3. clippy2.0 says:

    Yeah #3 hurts to do. I know my parents did it with me when they lent me money post college, and (due to the amount of money) they still send me yearly balance statements. But hey, it does well to ensure I pay it back, even if it does leave me bitter

    • KitanaOR says:

      Bitter? Seriously? Money for college interest-free??

      • longfeltwant says:

        quoth “post college”

        • KitanaOR says:

          Post, pre, during, what exactly are you complaining about? Do they charge interest?

          • clippy2.0 says:

            its more being held to a contract by a family member, with interest and due dates. I mean, I full expect to pay them back, but I’m certainly not back on my feet either. But like I said, them billing me does make me make the effort to pay them back; the bitterness comes because in the end, I will pay them back either way, just this way makes me a bit resentful

            • enabler says:

              Would you rather they had not loaned you money?

            • sirwired says:

              Are you resentful when you get your Visa bill in the mail? You took out a loan, your parents are reminding you to pay it.

              To others: And this is EXACTLY why lending money to family is a bad idea if you ever expect to be repaid.

              • RecordStoreToughGuy_RidesTheWarpOfSpaceIntoTheWombOfNight says:

                No, I get it. It’s like when you’re still living at home, and you’re planning on doing some chore, like mowing the lawn, or whatever, and you’re just about to do it (as soon as this Star Trek episode is over) and then your dad’s all like “WHEN ARE YOU GOING TO MOW THE LAWN?” and now you don’t even want to do it anymore because if you do it’ll be like you’re just doing it because he said something and when you say “I was totally about to do it” he doesn’t believe you anyway so what’s the fucking point you might as well just storm out of the house and go get drunk again.

                • Maltboy wanders aimlessly through the Uncanny Valley says:

                  Dude I would totally loan money to you. How much do you want? [gets out checkbook]

            • Herah says:

              Meanwhile, you’re parents are trying to keep the loan purely business, so as not to poison the relationship with their son. If they’d known you’d consider it poisoned anyway, they wouldn’t have bothered to help. Can’t understand why it’s the people who do the good deeds who are resented for it.

            • f5alcon says:

              “I will pay them back either way, just this way makes me a bit resentful” are you planning on murdering your parents, the way that is phrased could totally be taken that way.

          • maxhobbs says:

            I think charging interest may be against the law.

    • RedOryx says:

      Yeah, I don’t get the whole bitter thing.

  4. Rachacha says:

    We will sometimes borrow from Mom & Dad Savings and Loan, and we agree on an amount, interest rate, payment plan and sign a contract. The interest we pay is lower than any rate we could get at a bank, but it is higher than they would earn just having the money sitting in the bank (where they had it). We consider it a win-win, but we have always paid them back on time or early, and never issed a payment.

  5. MECmouse says:

    Do not lend money you can’t afford to give away has always been my policy no matter how close the friend.

  6. The Twilight Clone says:

    I’ve learned this lesson the hard way. I gave my brother $1200. He paid me $200 back at one point because I asked, but has conveniently “forgotten” about the whole thing.

    I decided that a good relationship with him is worth far more than the remaining $1000.

    • qwickone says:

      +1, but now my brother is into me for $3K. i’m pretty sure I’ll never get it back and it’s not worth the relationship to hound him for it (he doesn’t have it anyway, but that’s his own fault), but I’m mad that I let it get that far before I cut him off.

    • msbask says:

      Is it though? Your brother now probably considers you someone he can take advantage of, someone he doesn’t have to keep his word to, basically someone he can cheat.

      Maybe this isn’t really a “good” relationship? Something to consider. . . .

  7. ponycyndi says:

    #2 has always been my governing rule. I’m working on #1 more now, I’ve been burned too many times (by the same people! I never learn)

  8. scheering says:

    Someone needs to explain this to my husband!

  9. Conformist138 says:

    My family has simply helped me out of jams, with no repayment needed. So, when I loan money it’s always a gift in my mind. I give it if I can afford to live without it. I dont have a lot of money, so I never refuse to take repayment if it’s offered, I just never expect it or ask for it.

    To get all formal or bust out signed documents would sort of go against the lessons my family taught me about being generous and charitable.

  10. farker says:

    1) Don’t do it
    2) If asked again, refer to step 1.

  11. kataisa says:

    Do not give money as a loan give it as a gift. In other words if you loan money to somebody don’t expect to get any of it back.

  12. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    There’s some wisdom to the saying “a borrower is a slave to the lender”. This can make for uncomfortable family encounters.

  13. Dallas_shopper says:

    I don’t lend money to anyone in significant amounts. $1 here, $5 there, that’s one thing. Anything over that is a big fat NO.

  14. gafpromise says:

    My rule – don’t lend money to family. It creates bad blood until (if ever) it gets repaid and really changes your relationship with that person who you will need to interact with again and again. If I want and can spare the money, I give it as a gift -free and clear. No strings. That’s the only way to have peace and a positive relationship. If the recipient feels bad and insists on repaying it, that’s fine, but I don’t insist on it.

  15. XTREME TOW says:

    Often, it’s worth the ‘price of the loan’ to get the person to avoid/stay-away from you. Then you don’t have to put up with all of their nickel-and-diming nonsense.
    Less expensive and less BS.

  16. Sad Sam says:

    I’ve borrowed money from family, informally (no contract) and formally (contract). I’ve paid it back and had it forgiven (loan turned into gift).

    I’ve lent money to family and given money to family. Some of it has been paid back and some of it has been paid back in other ways.

    I know experts say don’t lend money to family but if you can’t ask or rely on family to help you out who can you ask. As long as a family member does not have some addiction issue or as long as I’m not enabling bad behavior I will gift and lend to those I love.

    • qwickone says:

      +1 I will continue to lend to friends/family that I think deserve my help, but always treat it as a gift in my mind, even if we call it a loan.

  17. southpaw1971 says:

    I don’t lend money. I only give gifts. I refuse to call it a loan and I don’t want any of it back. The only time I’ve been hit up was for my father who needed $1,000. I gave him $1,500 because I figured he was probably low-balling what he really needed (he’s a very proud man) and told him to please never pay me back.

    If you do it this way, you won’t run into any issues. Be prepared to part with the money, or if you can’t, say you can’t help. The way I figure it, my dad paid dozens of thousands, if not up to $100k of dollars raising me. I was merely paying him back a fraction of what I could say I “owed” him.

  18. chemmy says:

    Answer: Just say no.

  19. KitanaOR says:

    I lent my folks some money, and told them very clearly and specifically I needed the money back; it was from my wedding fund. They were short couple hundred. I let it go, but it just added to the resentment they never helped me with anything (college/car/house/wedding) and even took from my wedding. But borrowing from their daughter goes to show you how horrible they are with money. I’m sure they expect me to pick up their retirement tab, too.

    • Maltboy wanders aimlessly through the Uncanny Valley says:

      The best gift you can give to your kids is to never be a burden to them. Let the grandkids take care of that. :)

    • SteveHolt says:

      Wow that’s pretty messed up. Sorry about that, especially taking from your wedding monies. Perhaps not loaning money would be best, so they learn to be responsible. That ship has probably sailed though ;-)

  20. framitz says:

    When it comes to my grown kids, I just write if off when I give it, it’s less painful for all of us in the long run.

    If it involves co-signing I just say NO, as I can’t afford to pay if they fail to pay.

  21. Maltboy wanders aimlessly through the Uncanny Valley says:

    I’d rather just give my adult kids the money or buy them what they need. Does that make me a bad dad? They aren’t lazy or needy at all, and they don’t expect it.

  22. u1itn0w2day says:

    I frequently heard don’t go into business with family. Don’t do business with family. I’ve found that to be a good piece of advice.

    I know family who did business with one and other ie a loan and the borrower is taking their good old time paying it back. And the loaner fell into the trap ‘well you have ACCESS to money so loan it to me. They were manipulated.

    NO financial dealings with family unless it’s a flat out gift.

  23. energynotsaved says:

    I don’t lend money. I give it. I never expect to get it back, so I’m never surprised. Of course, I’m not talking big money–$500 is my limit.

    No one asks me to borrow big money, because I don’t appear to have big money: an accurate picture!

  24. shinazzle23 says:

    Find a bank that will let you open a CD to put up as collateral against your Loved One’s loan.

    Then they get to pay the bank back, not you.

  25. MaxH42 thinks RecordStoreToughGuy got a raw deal says:

    I got tricked into it by an old friend who was looking to sell her Mac Mini. I offered to pay a little more than it was worth because I knew she was not doing well, and after saying that she was going to pack it up tomorrow, she had it packed and just had to ship it, she said she needed it for her daughter to do her homework. OK, I said, consider it a loan. We can afford it, and I might have lent the money outright and not expected it back, but I feel as if it was a…what’s the term, where certain terms are offered, and then changed after the fact?

  26. Robert Nagel says:

    Think of it as a gift as soon as you give it. You can pretty well figure you won’t get it back. If you do treat it like found money.

  27. maxhobbs says:

    4) Get something in collateral when you lend the money.

    You should see their face when you say “sure, here is $300, but give me your game console and games to hold until you pay me back”.

  28. milehound says:

    5) Refer the borrower to a crowdfunding site like and offer to get the ball rolling with a minimum contribution of $25.

  29. rlmiller007 says:

    I’ve already told my daughter that I will giver her money but I won’t loan it. It may cost a few thousand dollars in my lifetime but it’ll keep her from feeling guilty and keep us communicating.

  30. Rick Sphinx says:

    Lend with your mindset as “I’m giving this money to “John” as a gift to help them out, never expect to get it back”. If you do, just count your blessings. If you don’t get it back, just let it go, don’t dwell on it. Move on. So the rule is, don’t part with money unless you can live without it forever. Also, is there ways they can pay you back without cash. Babysit, help around the house etc.

  31. Rick Sphinx says:

    Never co-sign a loan either. One time, your legally married to the person, or it’s your kid’s first loan. Never a friend or close friend. To risky for you, and if it goes bad, it’s your credit score that suffers.