This story originally appeared on SavvySugar.
Many of us don’t hesitate when it comes to lending a friend a few bucks here and there. But getting asked for a large sum is a whole different story and could get awkward if you’re not sure know how to handle it.
Consider these points before you find yourself in such a situation:
Basic questions to ask yourself:
- Is this person trustworthy? Recognizing whether this person is flaky in their day-to-day interactions or is notorious for impulsively blowing money can make all the difference when you’re deciding whether to lend or not. Consider character more than how much you like her or how fun and nice she is.
- How close is your relationship? Is it your best friend of 20 years asking you for help, or is it a third cousin you only see a few times a year? Your relationship matters, and how well you know her will play a role in determining how reliable she is.
- Can you really afford it? Think of the worst-case scenario here. Say this person doesn’t pay you back—can you afford to never see that money again? Only give what you’re willing to lose. If you’re comfortable helping out but not with the amount, then offer to give less than what she’s asking for.
- Are there alternatives? Borrowing money might not be the only solution to your friend’s problem, and that’s something you can try to figure out together. Is she looking to buy a new car when you have a friend selling his at an affordable price? Brainstorm other options.
What to say if you’re not comfortable lending:
- “I’m not financially in a position to lend money.” That’s really all you need to say, because no one should question this explanation. But be careful if it’s not 100% true—you don’t want to then brag to your friend about the big trip you’re taking next month.
- “As a rule, I don’t lend to friends.” By making this type of blanket statement, she won’t feel like there’s something about her that’s making you say no. It’s simply your hard-and-fast rule. Just make sure you don’t lend to another friend shortly after, which could cause hurt feelings.
- “To be honest . . . “: You’ve heard it a hundred times before, but in this scenario, honesty really is the best policy. Maybe you lent your friend money once before and and she still hasn’t paid you back. There’s nothing wrong with being upfront about your reasoning.
If you do decide to lend:
- Come up with a payment plan: Take time to sit down and decide on a repayment schedule that works for both of you. If you’re clear about your expectations from the outset, then things will (hopefully) go smoothly.
- Get it in writing: Your best bet is to document the agreement. You can easily download a form online, write down the arrangement, and have both of you sign it. It’s a standard practice, so chances are she won’t be offended.