MoneyShould you loan money to friends? We asked our users if they ever loaned money to friends, and we got back a slew of horror stories. Overwhelmingly, the responses have been of people not getting their money back. This might be a selection bias, but it was interesting to see how almost all the responders said if you’re going to loan money to someone just assume it’s a gift. Here is one particular story:

I have lent money twice to my friends to start their businesses but none of them returned it. One of them actually opened same business as mine and became my competitor!  Id rather give it to charity in future as either way you dont get it back. – Annonymous

Rules to Follow if you Insist on Loaning to Friends

  1. Never loan money you can’t afford to lose. Keep it small, under $100 should be offered as “gifts,” with no expectation of getting it back.
  2. Make sure there is an ability to pay back the loan.
  3. Don’t just do it to get the miles. Don’t go into debt to loan someone money (OF COURSE!).

Also several people claimed that loaning money was to the detriment of their friendship.  Relationships can be strained in certain circumstances!

Options if you Don’t Loan

Always be sincere, especially if it’s a hard time in a friend’s life. Other than not loaning money, you can refer them to services like online-lending like Lending Club. Here are more words of wisdom from people who have loaned money before.

I have a policy that seems to work: if a friend was to ask me to borrow money I have a mental checklist that I access:

  • 1) how much?
  • 2) how close is this friend to me?
  • 3) what is the money needed for?
  • 4) have I lent this person money before?
  • 5) if so, do they still owe?/or how long ago did I lend them money?
  • 6) is it an amount that I can bear to lose?

My mental check list has not failed, along with my policy to not lend money expecting that it will be returned (despite the “I’ll pay you back” plead, that’s the part that ends many friendships.) So by me lending money with no expectation if its paid back great! If not, then no loss but they know not to ask to borrow from me again. Please let me know whether you will be using my piece, my credit information is included in my signature line.


I have a strict rule about loaning money to anyone – I never loan anything I cant afford to lose.  That has meant I have saved friendships because most of the time when people have to borrow from me – they cant afford to pay it back.

I learned that the hard way when I loaned money I needed back at a certain time and lost a friendship when it was painful for him to pay it back – very late – and after it had hurt me to be without the payment. It works both ways when the money is an issue – the person you loaned it to feels guilty and doesnt want to talk to you any more, and you feel angry and dont want to talk to them.  So, if you cant afford to lose it dont lend it.

Since then I have followed my rule.  Once, when I was in need, someone I had loaned money to several years earlier – money I had never expected to see – drove 100 miles to pay me back so I would be okay.  I actually cried at that one.

I recently loaned a friend money I was fairly sure she could never pay back and, when she couldnt repay it, I realized that I would have spent that money on something else anyway.  The fact that it wasnt there because I had loaned it was similar to the fact that it wasnt there because I had spent it.  She went into a tizzy when she couldnt pay it back but it didnt cost us our friendship because I had assumed I was giving it to her when I made the loan anyway. I just turned it into a gift and told her to pay it forward when she had money.

Image courtesy of jollyUK via Flickr