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Old 10th June 2011, 13:44   #16
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Default Re: Precautions to be taken when lending money

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Originally Posted by noopster View Post
Purely my opinion:
- Do not ever lend money to a friend
- If you do, do not expect it back
- If you do want it back, be prepared to lose the friend.
Based on a true-life experience of watching two of my close friends drift apart because of money.
+100 to that.

I had similar similar experiences in the past and lost few friends. Still I keep giving money to friends/relatives. Somehow I am unable say NO to them.
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Old 10th June 2011, 13:49   #17
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Default Re: Precautions to be taken when lending money

Quote:
Originally Posted by noopster View Post
Purely my opinion:
- Do not ever lend money to a friend
- If you do, do not expect it back
- If you do want it back, be prepared to lose the friend.
Based on a true-life experience of watching two of my close friends drift apart because of money.
So true. Experience speaks and I can vouch for it.

Friend+lending money = you lose one of them. You can choose what to lose.
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Old 10th June 2011, 14:08   #18
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Default Re: Precautions to be taken when lending money

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Originally Posted by sachinj12 View Post
So true. Experience speaks and I can vouch for it.

Friend+lending money = you lose one of them. You can choose what to lose.
Most of the time, you lose both
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Old 10th June 2011, 14:37   #19
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Default Re: Precautions to be taken when lending money

Quote from Shakespeare:
Polonius:
Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
Old Polonius counsels his hotheaded son Laertes, who is about to embark for Paris for his gentleman's education. While he still has the chance, Polonius wholesales a stockroom of aphorisms, the most famous of which is "Neither a borrower nor a lender be." On Polonius's terms, there is little to argue with in his perhaps ungenerous advice. His logic is thus: lending money to friends is risky, because hitching debt onto personal relationships can cause resentment and, in the case of default, loses the lender both his money and his friend. Borrowing invites more private dangers: it supplants domestic thrift ("husbandry")—in Polonius's eyes, an important gentlemanly value. Incidentally, in the days when Hamlet was first staged, borrowing was epidemic among the gentry, who sometimes neglected husbandry to the point where they were selling off their estates piece by piece to maintain an ostentatious lifestyle in London.

Quote:
Originally Posted by noopster View Post
Purely my opinion:
- Do not ever lend money to a friend
- If you do, do not expect it back
- If you do want it back, be prepared to lose the friend.
Based on a true-life experience of watching two of my close friends drift apart because of money.
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Old 10th June 2011, 15:22   #20
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Default Re: Precautions to be taken when lending money

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Originally Posted by GTO View Post
No interest . It's so good to hear of people helping friends in this manner. Even I have never taken a single rupee of interest when giving a loan to a friend / relative.

If your friend wants to be absolutely safe, then ask him to consult with a lawyer. I do the following, and its served me well:

- Loan given via cheque ONLY
- Post-dated (loan due date) cheque taken from the person I'm giving the loan to.
- A simple promisory note identifying both of us and the loan details.

Good luck to him on the new biz! Entrepreneurship rocks.
Horrendously disagree. Having lost tens of thousands in loans given to friends at times of need (viz. father in hospital after major accident etc) even by well to do businessmen friends & knowing of people who lost lakhs lending to relatives - I think your approach is a bit too simple. I would recommend something more stringent - to atleast negotiate some sort of collateral.

/solely from the perspective of ensuring money doesnt disappear. I agree on not charging interest though.

Last edited by phamilyman : 10th June 2011 at 15:24.
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Old 10th June 2011, 15:56   #21
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Default Re: Precautions to be taken when lending money

Guys, thanks for the advice on taking caution. The decision on lending money has already been made, hence, lets keep this thread to list out "Precautions to be taken when lending money", and not describing personal experiences. It sorta makes it cluttered and the thread loses its point.


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Old 10th June 2011, 17:08   #22
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Default Re: Precautions to be taken when lending money

^^^^^ Prevention is better than cure!!!

Quote:
Originally Posted by noopster View Post
- If you do want it back, be prepared to lose the friend.
Based on a true-life experience of watching two of my close friends drift apart because of money.
Quote:
Originally Posted by YaeJay View Post
Of course none of us has a borrowing history. And I am someone that wouldn't make a friend of mine a business partner, I just cant take the risk of loosing a close relationship. Perhaps its just old me. But nice to know I am not alone!
Quote:
Originally Posted by sachinj12 View Post
So true. Experience speaks and I can vouch for it.

Friend+lending money = you lose one of them. You can choose what to lose.
Quote:
Originally Posted by KumaravelS View Post
Most of the time, you lose both
You guys have already stated what I wanted to.

Consider this:-

1. I lent money - by cheque.

2. I took documents of his property as motrgage - properly documented.

3. I have a cheque signed by him.

4. I have a request, witnessed by his relatives, seeking for more time to repay.

I have 15 years of experience in the legal world. If a person is determined not to repay, nothing - not even the courts - can make him repay.

PS:- Consider taking astrological advice, or better still, toss a coin - heads, you lend money, tails he will not repay it.
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Old 10th June 2011, 17:16   #23
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Default Re: Precautions to be taken when lending money

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Originally Posted by dhanushs View Post
"Precautions to be taken when lending money", and not describing personal experiences.
Only way would be to ask him to transfer some property to lender (and register that transfer), and this property would be used as collateral.

This shifts risk from lender to the person taking loan.
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Old 15th June 2011, 17:55   #24
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Default Re: Precautions to be taken when lending money

The only effective way to safeguard your loan is to ensure that you get some collateral from the borrower. Like others have mentioned, some Life Insurance policies, NSC's, Bank FD's, RBI Bonds can be endorsed to the lender. Also, property titles, gold, jewellery can be kept as collateral.

If the borrower does not have any collateral, then there is really nothing you can do to ensure that you are repaid.

Taking a cheque and presenting that, with the threat of prosecuting him u/s 138 in case of chq bouncing is not as effective as one might think. If someone does not want to pay, and you do not have collateral, you are basically in a soup.

So, only sure means of ensuring return of your sizable amount is to keep some collateral which can be used to square off the loan incase the borrower defaults on payment.

Hope it helps. And just incase you still decide to give a loan without collateral at zero interest, then may I request a loan too???
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Old 8th July 2011, 22:37   #25
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Default Re: Precautions to be taken when lending money

Not only should you not lend money to your friends, you should not go into a partnership business with them either,
One of the two scenario ensues-
a) the business goes kaput and you loose your money and your friend ( each blames the other for the failure)
b) the business does well and the there is a problem with sharing the profits or an ego issue about the policy decisions.

Best bet- dont lend,
Better bet - lend and expect no return

If you do get your money back hang on to the friend through hell and high water.
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Old 9th July 2011, 00:06   #26
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Default Re: Precautions to be taken when lending money

Quote:
Originally Posted by BaCkSeAtDrIVeR View Post
^^^^^ Prevention is better than cure!!!


I have 15 years of experience in the legal world. If a person is determined not to repay, nothing - not even the courts - can make him repay.
Little extreme don't you think? that too when lending to a frind?
I have had people borrow from me and most of them always do repay but there are a few who like you say whodon't want to repay

Quote:
Originally Posted by noopster View Post
Purely my opinion:
- Do not ever lend money to a friend
- If you do, do not expect it back
- If you do want it back, be prepared to lose the friend.
Based on a true-life experience of watching two of my close friends drift apart because of money.
How true this is! but then how do you refuse a good friend in need?

Quote:
Originally Posted by harishnayak View Post
On your second point - Even if he had conveyed once that he's financially tight and would not be able to do so i would have just forgotten the money however on the contrary i see his FB updates consulting if he should buy a new Scorpio or a second hand Pajero

.
I lend a fairly large 5 figure sum of money to a really good friend who promised to pay me back in 2 weeks. Its been 2 years now!
How do you ask back for your money? Its going to make me look like a money lender. He doesn't feel ashamed or doesn't think that he needs to repay me. Once I casually asked him about it and he didn't seem interested in talking about it.
Now I hear that he wants to buy a royal enfield TB or pulsar 220
Then he has the audacity to go around telling people that I have been behind him asking for my money.

I have lost both a good friend and my money. I'm too worried about the money but really sad that I lost a so called friend like this. But this has made a little poorer and a lot wiser.
Funny way this world works.

Last edited by Captain Slow : 9th July 2011 at 00:10.
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Old 10th July 2011, 21:29   #27
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Default Re: Precautions to be taken when lending money

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Originally Posted by Captain Slow View Post
Little extreme don't you think? that too when lending to a frind?
I have had people borrow from me and most of them always do repay but there are a few who like you say whodon't want to repay



How true this is! but then how do you refuse a good friend in need?



I lend a fairly large 5 figure sum of money to a really good friend who promised to pay me back in 2 weeks. Its been 2 years now!
How do you ask back for your money? Its going to make me look like a money lender. He doesn't feel ashamed or doesn't think that he needs to repay me. Once I casually asked him about it and he didn't seem interested in talking about it.
Now I hear that he wants to buy a royal enfield TB or pulsar 220
Then he has the audacity to go around telling people that I have been behind him asking for my money.

I have lost both a good friend and my money. I'm too worried about the money but really sad that I lost a so called friend like this. But this has made a little poorer and a lot wiser.
Funny way this world works.
I'm exactly in the same situation and am not too happy about it. I totally agree with your last statement.
As much as I would hate to do it but I wish he pays for this deed big time some time in his life and then remember what he did to me. These kind of people don't have any self respect and can be candidly termed as LOSERS
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Old 12th November 2011, 13:13   #28
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Default Re: Precautions to be taken when lending money

Update: Sorry I didn't update earlier, the money lent has been returned about a month back.
  • Money lent through cheque.
  • A signed cheque dated on the proposed return date taken.
  • Witnesses.
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Old 13th December 2011, 18:49   #29
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Default Re: Precautions to be taken when lending money

I was consolidating the list of people whom I had lended money during the past few years - was shocked to see that I need to get back more than 50K INR from some of these friends taken together.

I am the kind of person who feels shy to ask the money back. So some of them has taken that to their advantage and never bothered to give my money back. After this calculation, I have decided to ask (formally) the money back. Looking at pointers on how can I do it without hurting friendship much.

Some of them had tried to return the money in parts but some have never even bothered. There is one of them who told me through chat that he will 'think' about it - that made me really pi*sed.

In fact, it is irritating to see some of them buying expensive gadgets, new car etc., all the while they owe you in ten thousands.

What medium shall I use? Phone? e-mail? or direct meeting if possible? And how should I put this matter forward?

Last edited by clevermax : 13th December 2011 at 18:52.
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Old 15th December 2011, 17:33   #30
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Default Re: Precautions to be taken when lending money

Quote:
Originally Posted by clevermax
What medium shall I use? Phone? e-mail? or direct meeting if possible? And how should I put this matter forward?
Max- Use any medium comfortable with, i would prefer sending an SMS everyday till i get my money. That's just me .

When these people don't care about friendship over money, then why should we. Go to their houses everyday if need be, its our hard earned money after all. I would take it from them and give it to charity to at least it would be put to a better use.

p.s- I learnt this the hard way

Last edited by Technocrat : 16th December 2011 at 01:54. Reason: fixed quotes
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