It may be a bad idea to lend your money to the family because it can put your relationship in danger. However, sometimes your loved ones can have really hard times. Won’t you help your family in an hour of need?

The first and most important thing you should remember: do not lend your money to relatives or friends on faith and expect them to pay it back. When monthly earned income is not stable or not high, people may seek help applying for personal loans. It’s a quick and very easy way to get handy money. Often short term loans in UK can help you deal with urgent financial problems. Certainly, there is no need to abuse this option.

Of course, relatives may get offended if you reject their request, as a family is certainly the first place people hope to get help. However, the same way such loan companies lend money to strangers, you should be clever about setting up the conditions and repayment schedule for your friends and family.

When somebody asks to lend them your hard-earned money, take some time to digest this information and consider your answer. First offer other avenues to get extra money. On the other hand, if your relative or friend is deep in debt, most probably they won’t qualify for a bank loan. But still, make it clear that if you will lend them money, you require full repayment.

The following tips may help you reduce the stress while lending money to your family.

Lend Only Cash

Your friend or relative might ask you to co-sign an agreement for a loan or open a credit card under your name for their use. Immediately turn down such a request. Never engage in a swindle where somebody’s actions can affect your future ability to borrow. Cash is the only thing you can control and it won’t affect your credit score. So when your family member asks for financial help, lend only cash or politely reject.

Lend Money You Can Afford

Remember not to lend more money than you can afford. Even to a family member or best friend in need. Since there is a small chance that your money won’t be paid back, you should decide to lend only what you can afford to say goodbye. In the end, saving a relationship may be the best option.

Consider the Influence

You might be caught in a situation where a friend and a relative both ask you a favor at the same time but you can help only one of them. So when you lend money to one person, the other one may be offended. You should consider the influence of your action on everyone in order not to break the relationships.

If the difficult financial situation occurred inside your family with any of your children, it may be a good idea to make a family meeting where you can discuss the possible loan openly. Doing this will not only save your time and nerves but also prevent any of your other children and relatives from getting hurt or confused by your decision.

Charge Interest to Everybody

You might think this is unnecessary, but the fairest way to secure yourself and your money is to charge interest to both friends and family. Don’t be too soft-hearted as other people may use it in their favor. It will inspire them to pay you back in time.

Also, it is important to know about gift taxes you are supposed to pay when you lend money. Again, only charging interest will protect you from gift taxes. Otherwise, you can confirm information with an accountant about possible ways to secure yourself when giving large loans.