Many people have faced this dilemma in their lives. You are very close to someone and have shared good times together. But suddenly he/she asks you for money and you suddenly feel uncomfortable. Should you or  should you not?

Should You Loan Money To Family?

First thing is to understand that any loan given out to family is a clear loss of interest income that you could have earned on your hard earned money. The money could have made more money for you if you had invested it in a good instrument. But if loaned to family, it shall never earn you any interest.

The second thing to consider is the possibility of loss of the principal amount. Is your relative an honest person, and someone you could trust? If you have the slightest misgivings, you should think this through again and again.

The third thing to consider is the duration of loan. If you are sure you can recover your money in a small duration of time, it is easier to give the loan. But if no time limit has been set or offered, this is an open invitation to stress.

The last thing is to understand that debts in families often end up with damaged relationships. If the debt is not returned in the agreed time frame, the relationships suffer.


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