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A few quick questions:

Have you ever been asked to loan money to a relative ?
A large sum of money? (not talking a few hundred or a few thousand)
Did you require a personal loan document?
Did you charge interest?
How did it turn out?
And, was it a non-collateral loan?

Thanks in advance to those answering that have experienced this dilemma.

gemini wrote:A few quick questions:

Have you ever been asked to loan money to a relative ?
A large sum of money? (not talking a few hundred or a few thousand)
Did you require a personal loan document?
Did you charge interest?
How did it turn out?
And, was it a non-collateral loan?

Thanks in advance to those answering that have experienced this dilemma.

I have "loaned" money to relatives, but have no serious expectation of being paid back, despite that person's insistence that "I'll pay you back". I would like to be paid back, but I don't have a realistic expectation that will happen. That said, the money was not as serious as you're asking about. Off the top of my head, that person owes me about $2,300 or so. I count that money as gone, and the family relationship is worth more to me than it is to make an issue about being repaid.

But if you are talking about something like 10s or hundreds of thousands, there is only one circumstance under which I would loan it, and that is if it literally were a matter of life or death. But I wouldn't loan that kind of money so someone could buy a house or something like that. My thinking is that if they can't afford to buy the house, they can't afford to keep and maintain the house.......and I sure as heck would not post bail for someone on that large of an amount, no matter how much I loved him/her. Consequently, my investment would lose value rather than gain. For that, my relative can keep on renting.

My believe is, never lend money to a relative that you can't live without or that you wouldn't just gift to them with no strings attached. Almost any other possible lending arrangement or scenario will usually create more heartache and drama than simply saying "no" to lending the money in the first place.

imho

gemini wrote:A few quick questions:

Have you ever been asked to loan money to a relative ?
A large sum of money? (not talking a few hundred or a few thousand)
Did you require a personal loan document?
Did you charge interest?
How did it turn out?
And, was it a non-collateral loan?

Thanks in advance to those answering that have experienced this dilemma.

As you have been told, it's not good to loan money to a friend or relative unless you are willing to lose the money & or friend. If you intend to though, instead of lending the money directly consider co-signing a note at the bank or using the money as collateral.

This will allow the bank to manage the loan & save you some of the hassle.

I have loaned small amounts to friends and family in the past. I have always been repaid.
Not always in a timely fashion, but, still I was repaid. Life lessons learned.
This is a whole other ballgame. Large amount, not life or death situation but close.
Under normal circumstances I would just say no. I won't cosign a note because if they
default I would be dunned. This is a serious debt situation. I'm sick about it.
This was all laid on me yesterday. Out of the blue. I wouldn't ruin a family over
a few bucks not being paid back. But, this amount not being paid back.... the truth
is ...the family closeness and interactions would never be the same. It's a catch-22 fiasco.

Thanks to all that have responded so far.

I have to agree with all of the above statements. Don't do it if you expect to be paid back or if you cannot afford to lose the money

I have had to help very close family out of a bad financial situation. (Large bills to multiple creditors) Rather than loaning them money, I worked with them to get their debt restructured under the condition that I took over their finances to help them work themselves into a better position. Basically, I became their financial manager including paying their bills, managing their expenses and negotiating with their creditors. There were some legal issues required to get this done and, thankfully, we had a lawyer as a close family friend. The process lasted for several years and I did spend some of my own money from time to time. Most of that was repaid. In the long run, this turned out to be a positive experience for my family member and they, eventually, managed to become better money managers.

misterlarry wrote:My believe is, never lend money to a relative that you can't live without or that you wouldn't just gift to them with no strings attached. Almost any other possible lending arrangement or scenario will usually create more heartache and drama than simply saying "no" to lending the money in the first place.

imho

Javier730 wrote:

misterlarry wrote:My believe is, never lend money to a relative that you can't live without or that you wouldn't just gift to them with no strings attached. Almost any other possible lending arrangement or scenario will usually create more heartache and drama than simply saying "no" to lending the money in the first place.

imho

Yup. Look after your own immediate family first. If you would damage your own immediate family if you lost the money, then don't do it, would be my advice.

And even then, probably shouldn't do it anyway. If the relative asking you for a loan or to cosign one because he couldn't manage his money properly, what is going to change after he gets the loan?

DocV's method seems to be better if you are going to do something, but that's still taking on a lot of risk and responsibility.

Good luck.

Just watch Judge Judy and you'll have your answer. A good portion of the cases she hears are people loaning money to friends and family. Usually not a good idea. Like Also co-signing for loans is not a good idea. Like the Annoyed Man said, any money I give to family I don't have any expectation of getting back. The largest being 5k, and we just basically made it a gift.

Would losing that amount of money cause you any significant financial burden?

Seems I used some naughty words in my last post. I am truly sorry if I offended
anyone on this forum. I can assure you it was not my intent to cause distress
or be rude or uncivil to anyone. I certainly wasn't cursing or aiming profanities
at anyone. Once again, I apologize if I offended or upset anybody.

To those that have offered advice, again, thanks. The whole situation is so
convoluted it gives me a headache. I am not at liberty to disclose the exact details.
I know that in itself makes it difficult to seek advice. How do you advise when you
don't know the surrounding circumstances? I may have posted the questions simply
out of frustration

sounds like you are in a bad position to where they know you have the money to loan them and would probably end relationship or have issues if you dont loan it. To add to the issues if you do loan it and they are unable to pay back it puts you in a serious bind and probably end the relationship or have major issues. I would ask myself and look at the situation of do I feel they will pay me back and / or do what ever they can to pay me back. I feel sorry for you being put in that sort of situation to have to make a decision like that, it's not an easy thing to do either way you decide. First and foremost though I would take my immediate family into thought, if the loan could end up causing harm or making your wife, kids do without then I would have to explain it to them that way and say that is the reason I cannot do it. I have loaned very small amounts to friends, family and honestly either way you end up getting the raw end of the deal most of the time. Cause like I mentioned either they get mad cause you won't do it or they end up getting mad cause you want paid back in a timely manner or need to be paid back. But from the sounds of it your talking 10's of thousands in which case unless a matter of life or death I wouldn't loan that much out period. Also to me a lot of it would depend on what the loan is for.

I'm afraid I'd probably do a "what would Dave Ramsey do?" Unless it were a matter of health and well being, he would probably offer to sit with them and help them work out a budget to help them reach the point that they have that much money in the bank.
I'm sorry you are being put in such a position. Keep in mind that you and your wife have to be kept as the priority. If you make this loan and you don't get paid back, is it going to mean that you will have to work longer before you retire?