5 rules why you should never loan money to friends or family

By Ted Jenkin Fox News

Published February 3, 2024 8:00am EST

Fifteen years ago, I learned a lesson about lending money the hard way. A relative of mine hit difficult times in their finances and asked me for a $10,000 loan. You might be familiar with the situation. The family hit hard times, mostly from their own doing. Job layoff. Financially damaging relationship. Overspending on luxury goods and trips they couldn’t afford.

So, why ask me for a loan? Or better yet, why not me? They knew my family was having financial success. They knew we had just bought a big house. Nobody ever takes your money as seriously as their own money.

I’ll never forget what he asked me. "I just need a small loan of $10,000 to get me through this patch and I promise that I’ll repay you in the next few months." With one of the biggest mistakes of my life, I told him yes to the $10,000 loan.

No thank you note. No thank you e-mail. No follow up after my money hit his bank account. A few months later, things just got weirder. No follow-up. No payback plans. No communication at all. At our family Thanksgiving festivities, not even a mention of the loan at all.

Shakespeare wrote ‘Neither a borrower nor a lender be.’ That's a good guide, at least you could listen to Nancy Reagan

All I kept thinking was, "when is he going to just tell me where we are at and when I’ll get my money back?" From that point forward, our relationship became increasingly strained to the point that he never recovered financially, and I never recovered emotionally. So, we just don’t talk anymore.

Here are some rules to follow for loans with friends or family:

RULE 1

Adopt a Nancy Reagan '80s slogan of, "Just Say No!" It is best to tell people you don’t have it; you can’t afford it, or you simply don’t want to jeopardize your relationship with them. Those answers will solve 90% of the problems you’ll have with loaning people money.

RULE 2

You’ll feel better if you just call it what it is, which is a gift. If it is a gift, then you don’t quite have the same level of pressure because, essentially, you are saying that you’ll give somebody money with no strings attached. That means you could be helping a friend through a tough time or a family member who is having trouble paying for their kids’ college. You might feel better about it.

RULE 3

Make it official. The challenge becomes when you do an unofficial loan. This means you may not be clear about the terms of the loan (i.e. interest rate, repayment terms). Now, imagine this scenario. You loan money to a friend or a family member (much like an "Everybody Loves Raymond" episode), and then they book themselves a four-day trip to Las Vegas.

Then, every time you see them at any event, you’ll always be wondering in the back of your head … "When am I going to get my money back?" You should get a legal contract in place in terms of a promissory note, so you have documentation.

RULE 4

It’s business now, get ready for the relationship to be strained if they miss payments. If the loan goes south and your friend cannot pay it back, how will you handle the relationship going forward? Almost 50% of the adults who lent money to friends or family report having a negative outcome, 37% said that they lost money, and 21% experienced a damaged relationship with the borrower.

RULE 5:

No co-signing a loan. Period. When you co-sign a loan, it isn’t just about lending your credit reputation to help somebody else. It’s an actual financial commitment and a promise to repay their loan if they are unable to do so. This could include late fees, collection costs, and potentially wreak havoc on your credit score.

If you keep hearing the line from someone that you loaned money, "Don’t worry, I’ll repay you soon!" You might just get caught between whether you write off the loan or write off the friendship.

5 rules why you should never loan money to friends or family

为什么你永远不应该借钱给朋友或家人的5条规则

Fifteen years ago, I learned a lesson about lending money the hard way. A relative of mine hit difficult times in their finances and asked me for a $10,000 loan. You might be familiar with the situation. The family hit hard times, mostly from their own doing. Job layoff. Financially damaging relationship. Overspending on luxury goods and trips they couldn’t afford.

十五年前，我以一种艰难的方式吸取了有关借钱的教训。我的一个亲戚在财务上遇到困难，向我借了1万美元。你可能对这种情况并不陌生。这个家庭陷入了困境，主要是由于他们自己的行为所致，工作裁员，财务损失，在奢侈品和他们无法承担的旅行上过度消费。

So, why ask me for a loan? Or better yet, why not me? They knew my family was having financial success. They knew we had just bought a big house. Nobody ever takes your money as seriously as their own money.

那么，为什么要向我借钱呢？或者说，为什么不是向我？他们知道我的家庭在经济上很成功。他们知道我们刚买了一栋大房子。没有人会像对待自己的钱一样认真对待你的钱。

I’ll never forget what he asked me. "I just need a small loan of $10,000 to get me through this patch and I promise that I’ll repay you in the next few months." With one of the biggest mistakes of my life, I told him yes to the $10,000 loan.

我永远不会忘记他跟我说的：“我只需要1万美元就可以度过难关，我保证在接下来的几个月里还你”。然后我犯了一生中最大的错误之一，答应了借给他1万美元。

No thank you note. No thank you e-mail. No follow up after my money hit his bank account. A few months later, things just got weirder. No follow-up. No payback plans. No communication at all. At our family Thanksgiving festivities, not even a mention of the loan at all.

没有感谢信，没有感谢的电子邮件。我的钱打到他的银行账户后，就没有后续了。几个月后，事情变得更奇怪了，没有进展，没有偿还计划，一点交流都没有。在我们全家的感恩节上，甚至连提都没提到借钱的事。

All I kept thinking was, "when is he going to just tell me where we are at and when I’ll get my money back?" From that point forward, our relationship became increasingly strained to the point that he never recovered financially, and I never recovered emotionally. So, we just don’t talk anymore.

我一直在想，“他什么时候会告诉我我们到什么地步了，我什么时候能拿回我的钱？”从那时起，我们的关系变得越来越紧张，以至于他在经济上再也没有恢复，我在情感上也没有恢复。所以，我们不再说话了。

Here are some rules to follow for loans with friends or family:

下面是借钱给朋友或家人的几条规则：

RULE 1

规则1

Adopt a Nancy Reagan '80s slogan of, "Just Say No!" It is best to tell people you don’t have it; you can’t afford it, or you simply don’t want to jeopardize your relationship with them. Those answers will solve 90% of the problems you’ll have with loaning people money.

采用Nancy Reagan80年代的口号，“就说不！”最好告诉他们你没有钱；你借不起，或者你只是不想破坏你和他们的关系。这些回答将解决90%的借钱问题。

RULE 2

规则2

You’ll feel better if you just call it what it is, which is a gift. If it is a gift, then you don’t quite have the same level of pressure because, essentially, you are saying that you’ll give somebody money with no strings attached. That means you could be helping a friend through a tough time or a family member who is having trouble paying for their kids’ college. You might feel better about it.

如果你把它当成是一份礼物，你就会感觉好些。如果这是一份礼物，你就没有那么大的压力了，因为从本质上讲，你会给别人钱而不附加任何条件。这意味着你可能正在帮助一个朋友度过艰难的时期，或者帮助一个难以支付孩子大学学费的家庭。这样你可能会感觉好些。

RULE 3

Make it official. The challenge becomes when you do an unofficial loan. This means you may not be clear about the terms of the loan (i.e. interest rate, repayment terms). Now, imagine this scenario. You loan money to a friend or a family member (much like an "Everybody Loves Raymond" episode), and then they book themselves a four-day trip to Las Vegas.

让借钱变得正式化。当你进行非正式借钱时，问题就来了。这样的话你可能不清楚贷款的条款（比如利率、还款条款）。想象一下这个场景：你借钱给朋友或家人（很像《Everybody Loves Raymond》一集），然后他们为自己预订了四天的拉斯维加斯之旅。

Then, every time you see them at any event, you’ll always be wondering in the back of your head … "When am I going to get my money back?" You should get a legal contract in place in terms of a promissory note, so you have documentation.

然后，每次你看到他们，你都会想……“我什么时候能拿回我的钱？”你应该用票据的形式签订一份法律合同，这样你就有了文件。

RULE 4

规则4

It’s business now, get ready for the relationship to be strained if they miss payments. If the loan goes south and your friend cannot pay it back, how will you handle the relationship going forward? Almost 50% of the adults who lent money to friends or family report having a negative outcome, 37% said that they lost money, and 21% experienced a damaged relationship with the borrower.

现在这就变成生意了，如果他们没有还款，就要做好关系变差的准备。如果借钱变得糟糕，你的朋友无法偿还，你将如何处理你们接下来的关系？在借给朋友或家人钱的成年人中，近50%的人说结果是负面的，37%的人说他们损失了钱，21%的人与借款人的关系变差。

RULE 5:

规则5

No co-signing a loan. Period. When you co-sign a loan, it isn’t just about lending your credit reputation to help somebody else. It’s an actual financial commitment and a promise to repay their loan if they are unable to do so. This could include late fees, collection costs, and potentially wreak havoc on your credit score.

不要共同签署贷款。当你共同签署贷款时，不仅仅是把你的信用信誉借给别人，这也是一个实际的财务承诺，承诺在他们无法偿还贷款的情况下你去偿还贷款，这可能包括滞纳金、催收成本，并可能对你的信用评分造成严重损害。

If you keep hearing the line from someone that you loaned money, "Don’t worry, I’ll repay you soon!" You might just get caught between whether you write off the loan or write off the friendship.

如果你一直听到你借给钱的人说，“别担心，我很快就会还你的！”你可能要在是取消借钱和结束友谊之间左右为难。