smart spending

Loan money to loved ones?

Bankrate Audio » Loan Money To Loved Ones?

Listen to audio

Editor's note: This is a transcript of the audio file.

Lending money to loved ones could be a gesture of good will -- or it could be disastrous to your own personal finances, depending on the circumstances. I'm Claes Bell with the Bankrate.com Personal Finance Minute.

When a friend or family member asks for financial help, you may be tempted to agree right away. Think carefully, though; once a loan is made, it's never a sure thing you'll see that money again, and that could sour your relationship with that person.

One way to keep that from happening is to only lend out money you'd be willing to give as a gift. That way, if the borrower never pays you back, you won't be disappointed.

If that won't work, treating the loan as a business transaction can help ensure you get paid back. For instance, ask for regular payments on a set schedule, and record them just like a bank would.

Lastly, don't endanger your own financial security to make a loan. If you end up in debt or behind on your retirement saving, you may end up needing to ask for a personal loan yourself.

For more on this and other personal finance topics, visit Bankrate.com. I'm Claes Bell.

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.20%  0.10 4.30%
15 year fixed 3.28%  0.02 3.30%
5/1 ARM 3.53%  0.19 3.34%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.38% --0.00 4.38%
50K FICO-based HELOC 4.11% --0.00 4.11%
100K FICO-based HELOC 3.96% --0.00 3.96%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.63% --0.00 2.63%
48 month used car loan 2.91%  0.01 2.90%
60 month new car loan 3.16%  0.01 3.17%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.90%  0.00 0.90%
2 Year CD 1.10%  0.01 1.09%
5 Year CD 1.81%  0.07 1.74%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.66% --0.00 15.66%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.86%  0.01 10.87%
 
Next
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us