Whether you have experienced having a family or friends borrow money from you or not, it is still a good idea if you will know what are the do’s and don’ts when giving loans to someone.
5 Do’s and Don’ts of Loans
Here are tips on how you will deal with your families and friends who had borrowed money from you:
● Determine the repayment method
Before you hand over the money to the borrower, make sure that you can give clear instructions about the repayment method. They may choose to have it every week or every month. They may also have the repayment given to you in person, or you may opt to have it deposited to your bank account.
Since they borrowed money from you and not from banks or licensed moneylenders in www.smartloan.sg, it is not odd anymore that they have a bad credit history that is why they don’t have a choice but asked you for a loan instead thus making sure that they won’t run away from their obligations to you is a necessary.
● Do not expect too much in return
It may be fulfilling when you can help a family member or friend that needs help, but since they are close to you, it is not new already that they would repay you with the exact amount you lend them and in worst cases, even less than that. You shouldn’t expect for any interest rate or any extra fees as a gift of gratitude for helping them thereby accept whatever comes along during the repayment time.
● Don’t forget to make a written agreement
You didn’t just pick up the money that you are going to let your family or friends borrow from the floors instead, and you got it through hard work and perseverance thus making sure that the borrower will pay you, you have to make a written agreement.
A written agreement or a promissory note is consists of the loan amount, the repayment terms and the signature of you and the borrower as a proof that you both agreed with the repayment terms you two have discussed. It is also a good idea to get a lawyer sign the agreement especially if it is a significant amount of money so you can have legal rights in case your borrower can’t pay the loan amount.
● Don’t be scared to say “No.”
Your money is yours, and you have all the right to choose who you are going to let borrow your money that is why if there is someone who wants to borrow your money and you are not comfortable in giving them a loan, you can always decline. If they care for you, they will understand your decision.
● Do offer simple reminders if necessary
Lending money to our family or friends might be stressful sometimes where we are afraid to give them reminders, thinking that they may not repay, but there are ways on how you can remind them of their loan; this way, they will pay you back the money.