In this article, our debt collectors in Port Elizabeth talk about whether or not it’s a good idea to lend money to friends.
You have a friend who is in dire straits and has come to you and asked to borrow money from you. This is a tricky situation to be in, because as much as you would love to help your friend, you are also at risk of never getting your money back.
Furthermore, with mobile money-sharing apps and card-less ATM options, lending and borrowing has never been easier.
However, the sad reality is that getting your money back is a lot harder than it was to give and you may end up with a shattered friendship. We cannot stress this point enough.
Borrowing money is as simple as using internet banking or an payment application. However, the problems normally start when re-payment needs to take place.
Studies conducted in America show that more than half of consumers have lost a friendship due to money owed.
In addition, 77% of Americans believe that debt between friends is harmful to the friendship and more than 43% are willing to end the friendship with the person who owes them money.
However, if you would really like to help your friend, draft an acknowledgement of debt, have it signed and witnessed by both parties indicating the amount borrowed and the repayment terms.
It’s not hard to understand why friendships can end because of money owed, given the overall economic crisis we find ourselves in.
To make matters worse, people are more likely to talk about almost any uncomfortable topic before they discuss money matters.
So, although many consumers are willing to lend money to their friends, the mere thought of asking for their money back causes unspeakable stress and tension.
As the unspoken tension builds, the result is that two people who were once close friends, become estranged.
So, the moment comes when your friend approaches you and asks you to lend him or her money. The first thing you need to do is weigh up the pros and cons.
Bear in mind, that sadly there are generally more cons than pros in this situation. However, use your discretion and make a decision based on the possible outcomes.
The following are possible outcomes that you should take into consideration:
Firstly, should you decide to lend money to your friend in need, be sure to never lend more than you are prepared to lose.
However, this doesn’t mean that you shouldn't ask for your money back. It’s not a gift, it’s a loan.
Secondly, get legal protection – especially for larger amounts. A written, signed and dated agreement is considered a legally binding document by the court. Get two witnesses to co-sign – this will make it as legal as possible.
A verbal agreement is not enough to hold in court.
At Able Tracers and Debt Collectors, we offer professional and efficient debt collection services in Port Elizabeth and throughout South Africa. We can help you get back the money owed to you.
Contact us and speak to one of our debt collectors in Port Elizabeth today.
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