A friend just asked me for a loan. It's killing me!

[Westegg]

On the one hand, he's a good guy, and I trust him. On the other? It's a substantial sum (five figures). And my wife will be against it. Ohhhhhh, SO against it. Her take will be a reasonable one: We are struggling financially, although the loan would not, in theory, have an immediate impact on us, even if it were never repaid. We just have a huge overhead.

I know the loan is not for illegal, immoral or dangerous purposes, and I trust that it would be repaid. That is NOT the issue here. But frankly, I am uncomfortable with the request. If I were super-rich, and a loan meant just scribbling my signature on another check, then I'd do so. But I'm not, and it isn't. And I also have to respect my wife's thoughts on this. We are a team.

I feel guilty saying no to the loan, though I know I should.

I guess my question to you guys is: How do I say "no," and still keep the friendship?

I haven't dealt with this kind of thing before!

[grasswire]

1. tell him to ask you and your wife together

Because you are a team and it will affect her, too.

[helderheid]

31. RIGHT ANSWER. You win the prize... of something.. hopefully free

[pitohui]

2. i've dealt with it many times and here's the real deal

once the "friend" asks to borrow money, the friendship is already over -- once you accept that your FORMER friend is willing to risk throwing away what you have to get his hands on your money, then you understand what you have to do

if you say "yes," chances are extremely high that you will never see the "friend" or the money again, i've only been repaid once and even in that case, the friendship is damaged beyond repair because my former friend was too embarrassed to see me for all the years he couldn't afford to repay, after so many years, the friendship is broken and can't be fixed altho he recently sent me a check

no one else has ever repaid a loan, think logically, if they had the ability to repay the loan, a bank or credit card company that profits from loaning money would be shoving you out of the way to make the loan, that's how they earn money

if my husband loaned someone five figures against my wishes, the marriage would also be over

i have NEVER had a positive outcome from loaning a friend money and if you care about the friendship you won't loan the money because it's the kiss of death

but, as i say, the friendship is likely dead anyway, if your friend cared about your friendship and your feelings, he would never put you in such a position

one of the reasons people can't ever climb out of a poorer background is because as soon as they start to improve themselves a little, friends come out of the woodwork with hands out and in your pocket to "borrow" money -- it's that crabs in a bucket syndrome

once you are known as someone who loans money, how will you say no to the next "friend"? and the next? and the next?

there is no use in spelling it out to your "friend" how he made you feel, he already knows he is putting you on the spot, you simply say, "i'm sorry, but my wife won't go along with this," or "i'm sorry, but i was about to ask you the same thing because we're having some financial problems ourselves," and if your friend wants to continue to nag you about it, you block his calls and emails

but you can't save this friendship since your "friend" has already decided to end it

[DS1]

8. over react much?

I've loaned money to many people, and got it back. You can't possibly know that the friend has "decided to end it".

5 figures is a bit much, however.

[Stuart G]

23. I would take strong issue with this...........

I once asked a friend to lend me a substantial sum of money, I would estimate about six thousand dollars in today's money measured with inflation. I needed it very badly to pay off a divorce settlement. It was a bridge loan, till my home equity loan at the bank came thru which then took a couple of months. I repaid the loan with interest of 6 per cent, and never asked anyone for substantial amounts or even small amounts since then. And that was over 15 years ago.
,, In addition, the loan was guaranteed, with collateral. worth the cost of the loan. I was in a very bad place. My friend came through and I am still friends with him today. His generosity helped me tremendously....

Yes, some people suck, and some don't. Your line..."i have NEVER had a positive outcome from loaning a friend money and if you care about your friendship and your feelings, he would never put you in such a position........"
is your business.

but it is not all of our business.............Stuart G.

[CreekDog]

36. The Stuart situation is more ideal than most loans to friends IMHO

A short term loan, with interest with a way it was going to be paid off quickly --and collatoralized. In such a case, if one weren't loaning emergency money, this is the most ideal way to loan to a friend.

Unfortunately, many friends who need money need it because they don't have prospects of getting what they are asking for in a loan, no concrete way to pay it off, no collateral, don't want to pay interest, etc.

I agree that sometimes one needs to simply be a friend, but that doesn't mean lending five figures to that friend. If a friend asked for a few hundred for an emergency, and I thought it was appropriate, I would probably just give it to them. If it was too much for me to give them, I probably can't loan it anyway. Finally, if someone is asking for a significant sum of money, thousands and maybe more thousands, I'm not a bank, that's not an amount I can spare --I might have it, but I can't spare it.

Luckily I have not been asked very often for very much.

[laylah]

34. While I agree

with points of your arguement, I disagree on more.

From personal experience, I would never, EVER, EVER ask a friend for help unless I was in dire straits. Those that I have asked, and have responded, have ALWAYS gotten their loans back, PLUS interest! Our friendship was definitely NOT over and I resent the sentiment, while respecting the mind set.

That said, I have never asked a friend for more than 3 figures; therefore, the OP is in a safe position to express regret for the situation although s/he cannot help the friend.

[GirlinContempt]

40. Just because you and your friends are untrustworthy

doesn't mean everyone is.

I've borrowed money, and repaid money, and loaned money, and been repaid, all amongst friends. Sometimes minimal amounts, sometimes much more. I'm not friends with assholes or with people I don't trust, so it seems to work out.

[Roon]

46. This is true

<but, as i say, the friendship is likely dead anyway, if your friend cared about your friendship and your feelings, he would never put you in such a position>

He should have never asked. I am on disability and borrow money from various relatives. But it's only 10.00 or 20.00 and I always pay it back when I get my check.

[Bake]

3. "I wish I could, I really do, but I just can't."

That oughta do it. If he is really a friend, he'll understand.

Bake

[pitohui]

4. yeah but if he was really a friend he wouldn't put his hand in the guy's pocket EOM

.

[Bake]

6. Another excellent reason not to do it.

Bake

[Westegg]

10. Thanks. That sounds good...

...of course I'd want to say, and would feel obliged say, more: to EXPLAIN why I couldn't in detail, etc. But I guess what you're saying is that a friend shouldn't really need to. Yeah?

I don't mean to be obtuse about this stuff, but on the one hand I want to help a friend, and on the other, it's just too hard to do what he wants. If he asked me to go over to his house and wash his car every week for a year I'd do it, you know? No questions asked. Eh, that's probaly a shitty example of what I'm trying to say, but...

[jberryhill]

15. No, that's a great example

I've done all sorts of things in-kind for friends.

Money is different, and you don't have to explain. Again, if you can't afford to give it away, don't loan it to a friend.

[MissB]

17. Don't feel the need to say more.

If you can't afford it, you can't afford it.

Extra tip: Don't put the blame on your wife when saying no.

[trof]

20. What will his consequences be if you don't?

Loss of business?
One-time financial opportunity?
It would help to know what the money is for.
And if he won't tell you that, then 'No'.
See my post below.

[Westegg]

22. I gues it's "one-time financial opportunity"?...

...but it seems important to my friend now. I'll dig your post below. Thanks!

[trof]

30. Expand his business?

Or make a killer 'investment'?
I'd want vig.

[CreekDog]

37. one time business opportunity?

my opinion:

N-O.

this is your friend's investment and your friend should find a willing investor, one who is investing not based on friendship, but on financial viability and your friend should share as agreed in any windfall if any.

this is not an emergency and your friendship in this case is obscuring the fact that this may be a very unsound investment and you could lose all your money.

this isn't food, isn't a medical bill, isn't to keep them from being homeless, it's a loan so they can get more money (well, ultimately from somewhere).

i'll say this now, i've rarely heard of money given/invested/loaned for a purpose you've described to a friend turning out well for the lender.

if your friend is a good risk, a bank will give them an unsecured loan for a modest to credit card-ish interest rate. that's where they go for this.

remember, IMHO.

[LisaM]

5. I just bought a car from a friend

We drew up a bill of sale, we paid all applicable taxes at the DMV, and I gave her six checks (post-dated for the 15th of each month) that she can cash on my payday. All clean cut and above board. She trusted me for the money; I've already paid her, in effect. Can you work out something along those lines?

[pitohui]

7. please don't do this

i'm glad it is working for lisa but i know someone who did this and all of the checks bounced except for the first one, giving my friend the unhappy choice of either having the other guy arrested and put in jail for the bad checks or being cheated of the money

since the borrower (who is really a thief, she has stolen tens of thousands like this over the years) is a family member, he ended up being screwn out of the money

now he is suffering financially himself

[LisaM]

9. The amount I paid isn't nearly five figures

But there's no way the checks can bounce anyway unless I go to great lengths to change the way my check is deposited in my bank account, change my overdraft protection, etc., etc. It's probably not a parallel situation, but in my case, it would be difficult to make the checks bounce.

[Westegg]

11. It's all cash, all right now...

...Good suggestion, and a VERY good idea in general, but this is a different situation.

[La Lioness Priyanka]

12. my grandfather used to say " i had my money and my friend. i lent my money to my friend.

i lost my money and my friend"

[jberryhill]

13. Saying "no" should not affect the friendship

I've borrowed from friends, and I've loaned to friends. There's no obligation to say yes to every proposal for a loan among friends, though.

When you loan to friends, you only have to keep in mind one rule:

If not being paid back is going to bother you, then DON'T DO IT.

When you loan to friends, being paid back is a bonus. If not being paid back will cause ANY repercussions at all - DON'T DO IT.

If you can afford to do it as a gift and, hey, maybe he'll gift you back someday, then fine.

Loan the money ONLY if you can do so in the comfort of not expecting ever to be paid back.

[Westegg]

24. I think you've summed it up really nicely! Thanks.

[CreekDog]

38. excellent advice and approach

:hi:

[CreekDog]

14. anyone struggling financially cannot afford to lend 5 figures worth of money

listen to your own words.

anyone who would jeapardize their marriage by lending money cannot afford to lend that money.

the money you would lend is probably your emergency money --that is not money to lend out, it is to cover your expenses when trouble arises. after all, you aren't going to be able to borrow a similar amount from them are you?

finally, anyone who needs a 5 figure personal loan is not in a position to pay it back, certainly not in any short term way and most middle class folks aren't in a position to be without that amount of savings in the long term.

and i agree with the sentiment that one shouldn't put a friend in a position by asking them for such a large sum of money.

[Westegg]

26. CreekDog, you're right...

...I need to listen to mny own words. It's funny how hard that can be some times. Not funny like a clown. Funny/sad. But this is what life asks of us sometimes, and, not to get too philosophical, but maybe this has been a real good lesson for me. All your all advice is great. I appreciate it.

[CreekDog]

39. thank you

and your hesitation is an instinct that you should listen to before proceeding, there are very good reasons to hesitate and you should feel some confidence before doing it.

[youthere]

16. If you want to keep the friendship

You say no to the loan, or you give it with the resolution it will not be paid back (it may, but don't bank on it). If you are not okay with the idea it might not be paid, back you cannot loan the money. In other words, if you make the loan then you and your wife, at least in your own minds have to be okay with writing off the money, and NEVER mention it again.

That is the ONLY way that you can sucessfully loan money to friends and family. Call it a loan if you need to, but in your own mind make peace with it being gone. If you can't bear or afford to do that, you MUST say no.

On edit: Looks like Jberryhill and I gave the same advice.

[Westegg]

25. Tough words but good ones...

...I know in my heart you are right.

Thanx. Now comes the hard task of saying no, but I've gotten a lot from my post. I thank you all.

[trof]

18. "Neither a lender nor a borrower be, (been there-done that)

For a loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry."
-Shakespeare

Having quoted that, I had a similar situation.
A remodeling contractor, jack-of-all-trades, had done some work for me and we became friends.
After quiting time from another job he stopped by for a drink one evening.

Half-way into our second Scotch he told me he had a problem and needed a 'BIG' favor.
Needed to make his payroll at the end of the week and he wasn't getting paid for the current job until the middle of next week.
Andy is a great workman, but a shitty businessman.

He needed $5000 until the next Wednesday.
I had just barely that much in a savings account that we wouldn't need to tap for a while.
He knows we're retired and not at all wealthy.
I called Miz t. in and told him what Andy needed.
And bless her heart, she said "Andy we can do this. And I trust you. But you know we have to have this money back as soon as possible."
"Yes maam, I know."

We did it and I sweated bullets until he paid it back that next Wednesday. In cash.
whew

I wasn't only worried about the money.
I was worried about our relationship with Andy if he hadn't kept his end of the bargain.
I don't know if I'd do it again, and he hasn't asked since.

Tough call, bud.

[CabalPowered]

19. My own two bits, maybe discuss some collateral

If your friendship is to a point that he can ask you for a loan in that range, then I would think that he could reciprocate by offering something for collateral. I understand that it's not a question of repayment, but an arrangement such as this should be a two-way street, even if it is between friends. Chances are, he doesn't have anything that could act as collateral and you could use it as one reason for not loaning him the money.

:shrug:

[Coyote_Bandit]

21. Been there

Done that. More than once. In most cases I was repaid. In every case the nature of the relationship was forever changed. I will never do it again. Though I admit I have concocted ways to anonymously give money to friends who had financial needs (and had not asked for loans).

My experience is that if someone approaches me and asks for a loan then they see me as a resource rather than an equal. That is not a good dynamic to maintain a healthy friendship.

You can be polite and vague in denying the request. It isn't likely that your "friend" will push for further answers. If so, then you know that he believes you are obligated to loan the money. Not good.

And don't feel guilty. Do not blame yourself for things you cannot control. It was your "friend" who changed the dynamic of the relationship and made financial obligations one of its components.

[pitohui]

45. "they see me as a resource and not as an equal"

that's the perfect way to put it and is 100% in accord w. my experience

[Burma Jones]

27. I had this happen recently, we're still friends but I didn't loan him any money

Instead, I helped him find a lender that would accommodate him.

[MissB]

28. Isn't there some sort of online loan service that you can point him to?

Seems like there was something out there about a service that connects people needing loans with people willing to loan money. Maybe someone here knows what the hell I'm talking about.

[Sequoia]

29. Here's what you tell your friend: (get out your guitar)

My bills are all due and the babies need shoes but I'm busted
Cotton is down to a quater a pound and I'm busted
I've got a cow that went dry and a hen that won't lay
A big stack of bills that get bigger each day EE
The County will haul my belongings away I'm busted!

I went to my brother to ask for a loan I was busted
I hate to beg like a dog for a bone but I'm busted
My brother said there ain't a thing I can do
My wife and my kids are all down with the flu
And I was just thinking of calling on you I'm busted!

Lord I'm no thief but a man can go wrong when he's busted
The food that we canned last summer is gone and I'm busted
The fields are all bare and the cotton won't grow
Me and my family's gotta pack up and go
Where I'll make a livin' the Lord only knows but I'm busted!

[greenbriar]

32. friends don't lend friends money

or they lose friends

[NNadir]

33. DO NOT LOAN HIM OR HER MONEY.

If he is a friend, he will understand.

If he is not a friend, he will not pay you back.

I have been there, and done that.

[JVS]

35. Ask for big collateral

[GirlinContempt]

41. If you can't, don't.

A good friend will understand that. I don't know about your friend, but I know I would never ask to loan money from someone that I didn't consider a close, good friend. And because of that, if they for whatever reason at all couldn't help me, I never resented them. I accepted their inability to help me, and we continued to be friends because nothing about the asking for help or the inability to help should affect the friendship.

[Whoa_Nelly]

42. Playing bank (or being asked to) for a friend can be an uncomfortable poition to be in

I generally say no. I used to do it, and was always patient in waiting for repayment, but there have been times when it created resentment, either betwerrn us, or just within me.

You can say no BECAUSE of your friendship. If it makes you uncomfortable, then your friend, being a good friend, will reasonably understand. But, if it's a life or death, survive or fail situation, you may want to go with your heart....in the future...and with your wide's agreement, too, of course.

Meanwhile, don't feel guilty. You were honest, and if it turns into resentment on the part of your friend, then you will know what kind of friend you really did/did not have.

And, saying no because you know it would have to be a joint decision with your wife, and that she would not go for it, you did the right thing, Your wife comes first. :hug:

[Rabrrrrrr]

43. You say "NO" to the loan so that you CAN keep your friendship.

If the friendship ends because you said no, then he was never your friend, and you aren't out anything if he walks away.

But so many things can go wrong with a friendly loan - esp. one of that magnitude - the risk is too high. You might end up resenting it, even if he pays it back; he might get in an accident and never be able to repay it, if he wants to, and that will cause stress; even if he makes payments on time, he's always aware that he is, in a sense, beholden to you, and that can affect the friendship...

Too much potential to go wrong loaning money of that amount.

I'll loan my friends $20 or $50 occasionally, but never into the four or five digits.

[midnight armadillo]

44. Try Circle Lending if you must do it

Now called Virgin Money:

http://www.virginmoneyus.com/

It's a site designed to facilitate family and friend loans and it's well-regarded. They will take payment for the loan via direct withdrawal from your friend's checking acct.


Don't loan the money otherwise unless it's a gift. Don't let $ come into a meaningful friendship. Been there, done that, nearly lost my best friend who's more my brother than my real brother is over it like 13 years ago.

[Mz Pip]

47. If your wife is against it

then absolutely not.

If your friend is making you feel guilty then he is trying to manipulate you. Not something a good friend would do. If you say no and he gets pissed then he really wasn't that much of a friend.

Trust your gut. It seems to be telling you not to do this.

Mz Pip
:dem:

[Wcross]

48. If he can't accept "NO" as an answer he is no friend of yours.

Why should you take the risk if the bank is not willing? If you DO lend him money you will no longer be able to remain friends anyhow. Better to just lose the friendship rather than the friendship & five figures.