Financial Agreement

[Art_Critic]

I've made the decision to lend her the money cos she is in dire need of help.

 

I've done it many times before and always had great success in not ruining the relationship.

 

I have a couple of friends today that were able to get back on their feet and here here many years later they live wonderful lives..

 

I even have an incredible story that ends with a kidnapped infant 30 days old being returned to the adoptive parents all because I decided to loan some money and a car to a friend.

Someone went to jail over it too.. for 9 years and the baby was able to grow up.. that was about 18 or so years ago..

[Leia]

A point to consider when expanding upon the OP's original request, which was merely *how* to go about this, is that she lives in a different culture than we U.S. citizens and her culture may approach social interactions, friendships and matters of finance very differently. OP, am I correct that you reside in the Middle East? If so, that definitely changes my tone of advice. I have friends from that region and it is truly a different dynamic. They approach friendship and money completely differently than I do. Hope it works out

 

Thanks, carhill. I know some would get the whole point of this thread when I started it .

 

I am not from the Middle East , dated one and that would be the last of it! I am part European/Asian. I'm not sure if it's a cultural thing but my family and I have never had problems with lending/borrowing money and people paying us back.

 

You are right about ME people. They do approach friendship and money differently. One of the example is my ex. He would lend money to his friends ~ vice versa and they never had a fallout about it.

 

I've done it many times before and always had great success in not ruining the relationship.

 

I have a couple of friends today that were able to get back on their feet and here here many years later they live wonderful lives..

 

I even have an incredible story that ends with a kidnapped infant 30 days old being returned to the adoptive parents all because I decided to loan some money and a car to a friend.

Someone went to jail over it too.. for 9 years and the baby was able to grow up.. that was about 18 or so years ago..

 

Wow! You're a good friend, Art. Very impressive

[Leia]

I don't think anyone that does not lend money to their friends is NOT a good person, just to be clear. It's just one of those things you wouldn't want to do for fear of complicating the friendship. As for me, I want to help her out. In any way I can, I want to help her out.

[Trimmer]

I don't think anyone that does not lend money to their friends is NOT a good person, just to be clear. It's just one of those things you wouldn't want to do for fear of complicating the friendship. As for me, I want to help her out. In any way I can, I want to help her out.

 

Yeah, I think the common advice is a good starting point: be very careful to consider the possible outcomes and consequences if a loan between friends doesn't work out. And the logical super-safe, never-risk approach to this is: just don't do it.

 

But that doesn't logically lead to statements like the following:

 

Sure, people do it all the time and nothing happens. But their in the minority.

 

Just because a bad outcome has the potential to be really bad and uncomfortable affecting relationships, etc., doesn't mean that successful outcomes are "in the minority."

 

As you point out, there's nothing wrong with the oft-repeated, folksy, never-risk, "don't loan money to friends" approach. But choosing to depart from that advice, with some forethought and wisdom, doesn't mean you are stepping off a cliff.

[You'reasian]

I have a friend that is in dire need of financial help from me. I know that she really needs this help from me. She has tried other ways but failed to get a personal loan for reasons she has told me that were valid. I also know that she needs this loan from me to start off her life [she has been out of job for a few months and received a great offer which she will start in August].

 

She's not asking for a lot but she insists that we have a financial agreement. I have never done this sort of thing before and I was wondering if anyone could help me out by drafting one for me? You can PM me if you think it's better that way.

 

Thanks!

 

I've never loaned money to friends neither have I borrowed. Instead, I give it to them as a gift with no expectation of repay.

 

If she insists that you have a financial agreement, the two of you should meet with a lawyer, draft the document with terms of interest (if there is any) and have both of you sign and date it.

[Leia]

As you point out, there's nothing wrong with the oft-repeated, folksy, never-risk, "don't loan money to friends" approach. But choosing to depart from that advice, with some forethought and wisdom, doesn't mean you are stepping off a cliff.

 

Yes. I have given it some more thought about this and I am still doing it. If she pays back, good. If she doesn't, fine with me. If I didn't have the experience of lending money to friends and they paid back, my decision would have been the opposite. Who knows.

 

Thanks, Trimmer. You, carhill and Art have been very helpful.

 

I just wish people would get it in their heads that I AM NOT going to get a LAWYER involved in this. It's a small amount and it's my money so I really don't see why anyone else feels the need to repeat the same thing over and over again when clearly, I have stated my decision on not wanting a lawyer involved. It's so annoying.

[Trimmer]

I just wish people would get it in their heads that I AM NOT going to get a LAWYER involved in this. It's a small amount and it's my money so I really don't see why anyone else feels the need to repeat the same thing over and over again when clearly, I have stated my decision on not wanting a lawyer involved. It's so annoying.

 

I know - from reading the thread, it seems pretty clear to me where your head is, and what question you are actually asking. The only thing I can think of is that once a thread gets more than a few posts long, sometimes people just read the Original Post, and blast off a reply without benefit of the context of the discussion that follows...

[Leia]

I know - from reading the thread, it seems pretty clear to me where your head is, and what question you are actually asking. The only thing I can think of is that once a thread gets more than a few posts long, sometimes people just read the Original Post, and blast off a reply without benefit of the context of the discussion that follows...

 

Thanks

 

Haha so true. Annoying, that.

 

I'm off to meet her with her. She is bringing another friend to be the witness which I told her was not necessary. I don't like anyone else to know but I think she really wants to treat this as a loan.

 

Will update for those interested.

[Leia]

Ok. So I have given her the money and she came up with an agreement where if something came up and she couldn't pay on time [monthly], she will pay a penalty fee of 10% of what she should pay on a monthly basis.

 

I signed it and told her if anything, it's 'halal' and that I'm helping out a friend in need.