What are the pros and cons of lending money to friends? Even if it seems like an obvious thing to lend your friend money, you should think twice before doing so, because many a friendship has broken down over money. It's not for nothing that they say friendship ends with money...
Here are some helpful questions that should be clarified before lending money in order to facilitate a decision and avoid irreparable damage to the friendship.


How much money is involved and how is it paid back?

A small amount of money does not normally cause any major problems between friends. However, if a friend asks for a larger sum, it makes sense to clarify the situation. The best thing to do is for both parties to sit down together and draw up a financial plan in which the repayment of the borrowed sum is set out. It is important that the plan is adapted to the financial situation of both creditor and debtor.
An official plan also clarifies that repayment must be made despite the friendship.

The following points must be clarified:

•     Repaid weekly or monthly
•     How high are the individual instalments
•     How long does the instalment take in total

Will the loan put a strain on the friendship

Some are surprised to realise that the friendship changes as a result of the loan. One party is in a position of power, the other in debt. The friend who lent the money may become overly critical or even suspicious. He sees his friend spending money and thinks he is entitled to it himself. This can break up even long-standing friendships.
Talk about it before you lend the money and, if necessary, make a kind of contract with the condition that, for the sake of the friendship, you make sure you stick to it.
Communication is the most helpful means of avoiding problems.

What happens if the instalments are not paid

Banks can take action if payments are not made. It's a different story with friends. Does missing an instalment mean that your friend is taking things too lightly? There are only three options in such a situation:

•     Talk to your friend to clarify the reasons for the non-payment. Make it clear to your friend what is at stake in order to motivate him.
•     If there is a contract, you can take legal action, but this will certainly mean the end of the friendship.
•     Write off the missing money. Is friendship more important and can I overlook this event in the future?

It is important to talk openly and honestly about the situation right from the start. There may also be other ways to help out your friend in need of money.
Lending money is always a risk and puts the friendship to the test.