Money lending tricks to relatives – what you need to know

Here are some interesting ideas on money lending tricks to relatives and how to get your money back

By: Hitesh Khan/

Money lending tricks – When not to give

Remember, it is your money. You have a right to know why it is being borrowed. Don’t lend if your friend or relative would rather keep mum on about the reason/s why he needs it. If it is to pay up his credit card debt or personal loans due to his frivolous lifestyle, back away. If he has been living above his means, it is not your obligation to bail him out.

The same applies if it is to finance a club membership, a home theatre, a car or even a vacation (no matter how long awaited). Secondly, if a friend or relative is borrowing it, chances are they will not be paying you any interest — the money you loan is not being invested or even saved. At the very least, they owe you an explanation.

Money lending tricks about when you may want to give in

Don’t just give in because of your warm heart. Do so because of the situation at hand. If it is a sudden illness or calamity, then you should consider. After all, what are friends and family for?

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Maybe your friend needs some financial assistance to get a management or a professional degree. Or maybe even to buy a house. In such cases, ask yourself a few questions.

• Do you have the money to spare? Or will you be asking your parents or spouse for it?
• Will giving the money cause a rift in your family?
• Has your spouse agreed to your giving the loan?
• Will your family have to make sacrifices if you lend this money?
• You must also make allowances for slip-ups.
• Are you ready to lose the money? Writing if off as a gift is one thing, but will you resent your friend for it?
• Can you afford to lose it? You may want to, but does that mean you will have to cut corners at home? Will your family suffer?
• Even if you do eventually get your money back, are you prepared for a long wait? Do you realise you will only get back the principal — no interest or any other additional money? And when you get it back, the money will be worth much less because of inflation.

Think about these issues.

One of the keys to money lending tricks is to ask when loan would be repaid

Don’t feel embarrassed. It is your hard-earned money. Even if it is not hard-earned, it is still yours. Ask him when and how he plans to repay. Does he plan to do it with his next salary or a year from today? Three payments over a year or a small amount every month? You must let him know you are serious about getting your money back and he can’t ride on your back for free.

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If it is for business

The money lending tricks for this one is easy – You are not obliged because it is not a matter of life and death.

The fact that you like the idea does not make it an effective predictor of future earnings. Do your groundwork. Part with your money only if you find the idea feasible. In case you decide to lend the money, prepare a lending agreement, or an “I Owe You” document. Make it clear how much is being lent and what the terms and conditions and repayment schedules are. Ensure that both of you sign it.

Get your money back. Always be boundless in your charity, but shrewd and cautious in your lending. In case you are not a wise or careful lender, here are some money lending tricks:

• If they ask for $500, give them around $100. That way you make them happy and you don’t mind writing it off.
• Tell your friend’s parents about his financial problem. Not only will they realise their son was messing up his life, they may also a personal interest in settling his debts.
• Ask your friend for some jewellery or watch as a collateral. Tell her when she repaid it, it would be returned to her. It would make her determined to repay it.

Always remember in friendship, you win some and lose some, and having the right money lending tricks up your sleeve will give you peace of mind and your friends and relatives closer.

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