Okay, I had to learn the hard way about lending money to “friends of friends”. Recently, I lent money to a friend of a friend. Later on we discovered that this person was somewhat a CONMAN! Can you believe it? He takes advantage of emotions, throwing pity parties for himself. The thing is, I had no idea my friend and I were being played.
So I learned the hard way the rules of lending money.
Rule #1 – ALWAYS HAVE THE AGREEMENT IN BLACK AND WHITE
It’s never insulting to a friend or family member if you draw up an official agreement to assure that you will get paid. If they get insulted, it’s their problem not yours. Make sure that every page is signed and each party has a copy of the agreement. To make it more fool proof, have witnesses sign it as well, but I doubt that’s necessary. Plus, that also shows that they may have no intent in paying you back. .
Rule #2 – COLLATERAL
You may ask me.. What’s a collateral in “loan” terms? Basically, a collateral is a keepsake worth the money borrowed. So you keep it until you’re paid back or until the agreed date that you’re supposed to be paid back. This is so important since it also gives assurance that you will be paid back. If they don’t pay you back, then you have the right to sell or own the collateral given to you.
Rule #3 – KNOW THE WHOLE STORY
Sadly, one of my BIGGEST mistakes. I was so drawn into the sad stories that with no questions asked, I just loaned quite a sum of money. Now that everything is out in the open, I doubt his sad little story was even true. It’s never offensive to be curious about the situation. Don’t get duped just cause a person shows you tears. There are great actors in this world.
Rule #4 – ALWAYS ASK FOR PROOF
“I’m being sued and asked to pay _____php as a settlement” YEAH RIGHT! Always ask for proof! You can never be too careful especially when lending a huge sum of money to someone be it a friend or a family member.
LAST BUT DEFINITELY NOT THE LEAST
Rule #5 – NEVER LEND TO ANYONE
Okay, it may sound too harsh but to put it lightly, as much as possible.. if it can be avoided don’t lend to anyone. This is just to avoid ruining any kind of relationship.
Well, that’s about it. No wonder loan sharks are scary.. They have to be or else they wouldn’t get paid. Hahaha! Oh well! Just sharing the things I learned from this experience. This is probably the last time I’ll be lending out cash. It’s not being selfish, it’s being protective of the cash I work hard for every single day.
Next time someone wants to borrow from me, I’ll be like “GET A JOOOOB!” LOL kidding. Probably. 🙂