Dealing With a Friend Who Won’t Pay Back a Loan
Lending money to friends can be tricky. Check out this article for a few pointers on how to make sure the loan won’t cause your relationship to go sour.
A friend asked you for a loan a month ago and promised to pay you back in a week. You decided to help them out. Now, they’re avoiding you and dodging your calls. Not only did they fail to return the cash, they’re also acting pretty immature about it. No wonder you’re concerned about how the relationship will evolve from now on. If you allow the situation to escalate, your friendship can quickly turn sour, and both parties involved will likely be hurt.
Lending money to friends can get very complicated. As time goes by, you get nervous about asking for the cash, but you really need it back. What should you do? We’ve gathered a few pointers that might help you sort out this mess without damaging the friendship.
Give Gentle Reminders
Maybe your friend has so much on their mind that they honestly forgot about the loan. If this is the case, a gentle reminder might do the trick. Send them an email or bring up the issue during one of your get-togethers. If your friend has a good sense of humor, make a joke about getting your money back. Humor works wonders when it comes to lightening the mood.
Better yet, let an app do all the work for you. Venmo, available for both iPhone and Android phones, allows people to make and receive payments. Also, it helps you easily collect money from people who owe you, by sending reminders to those who are overdue on their bills.
Suggest Drafting a Payment Plan
If your friend can’t afford to pay back the entire sum all at once, suggest you both sit down and come up with a payment plan. Write a few terms and conditions for the payments in order to establish a clear structure to the loan. Agree on how often your friend will make the payments, and how much money they will put down every time. With clear deadlines it’s easier to hold your friend accountable when they miss a payment.
Figure Out Other Repayment Options
When you start to believe that your friend will never be able to save enough money to pay you back, it’s time to consider a different approach. For instance, you could barter. Ask if they’d be willing to help you out with something – maybe they can do some chores around the house for you or contribute to a project you’re currently working on. This way, they’re off the hook for the money and you’re also getting something valuable in return.
Another option would be ask them to cover the check for you whenever you go out together. It may be easier for them to pay you back this way. This can be a fun perk for you as well.
Offer Your Help
If you notice your friend struggling financially, maybe it’s time for an intervention. Review their finances and help them draft a budget. That way, it will be easier for them to live well within their means. Additionally, you can use this opportunity to figure out how much they can afford to pay you back each month.
You can take things even further and offer a few solutions to their money troubles. If they carry too much credit card debt, suggest they talk to their creditors and come up with a debt repayment plan. Use a mortgage calculator to figure out if refinancing their home loan could ease their financial burden. Give them a few tips on how to live more frugally until they manage to sort through their financial mess. Not everybody is well-versed when it comes to money management. Your friend will definitely appreciate your advice.
Gift the Money
If you truly value your relationship and you can afford to live without the money your friend owes you, consider gifting the amount. You’ll feel better and finally be able to move on.
In the end, not addressing the issue will do more harm than good. Don’t be obnoxious or petty. Approach your friend in person and have an honest conversation about your financial dispute. It might get awkward, but it’ll be necessary if you want your friendship to survive.