July 25, 2023
Friend or Lender: Protecting Relationships When Money’s Involved
Lending money to friends or family can strain relationships if not handled carefully. The article advises creating a written contract outlining the loan amount, interest rate, repayment schedule, and consequences for late payments to avoid misunderstandings and potential resentment. Charging interest is also recommended, both to satisfy IRS guidelines and to create a more equitable dynamic between lender and borrower. Ultimately, the article suggests that if you’re uncomfortable with a formal contract, it might be better to gift the money instead to protect the relationship.
