Lending family members money can get messy if you don’t take precautions before hand. Here are six tips to consider before you dish out the dough to your family:
- Understand that the relationship will change. When family is involved, so are emotions.
- Consider making it a gift instead of a loan. Giving the money as a gift will insure that there are no expectations for the receiving party.
- Say no respectfully. You don’t have to say yes just because they’re family, but you should do your best to be respectful.
- Decide what the interest rate will be and make sure that is made clear to the individual who is expected to pay it.
- Get the loan in writing. There will be no confusion later if you write out the details now.
- Consider the fact that you may not get your money back. The biggest risk of lending money to family members is that you may never see that money again.
Before you risk your relationship with your family members, do your research and take all the options into consideration.