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Have You Ever Loaned to a Friend?


5:18 pm
February 20, 2012

After College Money



posts 33

Hi Yakezie,

A friend asked me to cosign on a loan to help him with debt consolidation.  My credit is pretty good and I think it can help him out.  I have done business with my friend before and I do trust him.  He showed me how to sell comic books online and taught me all his profitable secrets about that.  So I feel I owe him one, and I would like to help him out if everything goes smoothly.

Have you ever loaned money to a friend?

What tips do you have? 


7:31 pm
February 20, 2012


New York


posts 846

Say no… Run run run. 

8:12 pm
February 20, 2012

This That And The MBA


posts 240

Friends and family are the hardest ones to hold accountable.  Which is why i try to never do business with close friends or family.  As Jai said RUNNNNNNNNNNNNNNNNNNNNNNN




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8:40 pm
February 20, 2012


North Dakota, USA


posts 860

Look.  You feel like you owe the guy one, I understand that.  But, let's be pessimistic here and say that there's a 50/50 chance of him defaulting on the loan and you having to pay it off to CYA on your credit score.  Can you do that?  Can you do it without it ruining your friendship? 

I've loaned money to friends many times.  But, generally in amounts of less than $100, and each time, I was glad to have it back, IF it came back.  If it didn't come back?  Well, it wasn't an amount I couldn't lose, so it was always better to forget the loan than forget the friend.  The only time I loaned an amount over $100, was about $300 to help a friend buy an engagement ring for his girlfriend.  (She said yes.)  I know that he had every intention of paying the loan back, and probably would have.  But, instead of getting them a present for their wedding, I forgave the loan. 

We've all been there, and we've all done that.  Some have had it go terribly wrong.  In those cases, you sometimes have to wonder about the friends those people keep in the first place.  I'm sure your friend will attempt to pay back the loan, and will if he can.  But, the key point is, what if he can't?  What if he loses his job or whatever and can't pay back the loan.  Your credit will be on the line if that loan goes into default.  You'll either have to pay it off, or take the hit to your credit. 

4:09 am
February 21, 2012



posts 1466

Tough call. 

I lost a relationship with a cousin over borrowed money. She borrowed money for a car promising to pay it back in six months of installments.  After the first month it stopped.  She never answered the phone or anything else.  Finally after about a year a check showed up.  We've talked since but it definitely put a strain on the situation.

If you feel you owe him one and can spare the money, what I would do is look at it as if you're not going to get the money back.  If you're OK with that, go ahead and loan it to him.  If you do it get back, great, but if you don't, it hopefully won't be as big a blow.

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6:36 am
February 21, 2012



posts 664

My tip would be don't do it. If you want to help him out, give him the money or offer to look at his finances with him.

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7:50 am
February 21, 2012

Eric –

Portland, OR


posts 2120

I would never do that. I would probably not do that for a family member let alone a friend. It has more potential for disaster than good.

I once loaned a friend $5 in middle school for lunch toward the end of the school year. He moved out of state over the summer and I never got my five bucks back. Imagine that scenario amplified to thousands of dollars. Not good.

8:12 am
February 21, 2012



posts 727

I once let a friend buy a truck from me on a payment plan.  I'm glad I had a proper loan agreement, because after he quit talking to me, moved out of state for a year, then moved back, I got to play repo man.

I then sold the truck to a much closer friend of mine, also on a payment plan.  He doesn't pay regularly, but he does pay.  He's my closest friend and he needed the truck more than I needed the money, so my wife and I agreed that, if he couldn't pay, we wouldn't care.

8:13 am
February 21, 2012




posts 1041

The only way I would consider it is with a contract specifying (1) exactly how and when the loan will be repaid and (2) what happens if that agreement isn't honored (think collateral). I know it's difficult to be that way with a friend, but it's necessary. A friend will neglect an obligation to you before neglecting one to a bank or other lender, and it's necessary to spell things out if you want to keep the friendship intact.




9:24 am
February 21, 2012

Michelle (Making Sense of Cents)


posts 400

I would say don't do it.

1:49 pm
February 21, 2012

The Financial Blogger


posts 429

If you can lend him money, that's one thing but don't jeopardize your credit score by co-signing on a loan. You may end-up paying his debt in total (after seeing your credit score take a huge hit). Definitely not a good idea!

6:15 pm
February 21, 2012


New Hampshire


posts 5

I agree with those who have said not to do it. I cosigned a loan for my parents & at various times they have failed to pay it and it really puts a strain on the relationship. I would recommend only cosigning a loan if you alone could comfortably make the loan payments if your friend bails on them. Also think about how you will feel towards you friend if they stick you with paying the loan back.

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9:14 am
February 22, 2012



posts 361

It is your decision.  You need to think about the consequences of him not paying you back and whether you would be ok with it.  I did lend a friend a few thousand dollars a couple years ago and of course wrote a couple posts about it.  I was confident my friend would pay me back eventually and he did.  It took him longer to pay me back than it should have but I was ok with it.  He had helped me out a lot when I was struggling financially so it seemed fair to me that I would help him out.

2:12 pm
February 22, 2012

After College Money



posts 33

Thanks everyone for the reply.  I doubted the idea from the start, but I thought I should ask Yakezie for some advice and to spark a conversation.  My friend is not in a desperate situation, he just would like to lower his interest rates.  But still, I think the loan will be more trouble than it is worth, and may strain our relationship.  

I also thought about how successful I have been in lowering my own student loan debt, and I would not want to take on any additional debt/risk.  I still have a negative net worth when I factor in my student loans, so I am in no position to risk my money.  I'm going to tell him no.

Has anyone had success with lending to a friend?  Jason, it sounds like you were OK with your close friend paying you, but you had to Repo the truck from your other friend.  That sounds like a hassle, and it is something I would never want to do.

3:08 pm
February 22, 2012

The Financial Blogger


posts 429

I did it with my best friend but we put everything under writing and under clear and straight forward condition over 12 months. it went very well :-)

7:52 pm
February 22, 2012



posts 126

I'd loan a small amount < $500 only if it is a real "need". Otherwise, say no.

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2:57 am
February 23, 2012



posts 8

How much is the loan consolidation for?  If you are ok with paying the full amount on your own, then cosign.  If not, then don't.  


It's hard with money and relationships, but to me, the fact that your friend is facing a loan consolidation and cannot qualify based on his credit score alone speaks volumes here.

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4:30 am
February 23, 2012



posts 1466

After College Money said:.

Has anyone had success with lending to a friend? 

I had two loans to friends that were paid back in full with no hassle.  Both were for relatively small amounts if I recall (probably less than $200). 

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5:13 am
February 23, 2012

Smart Wealth



posts 304

I have never loaned a friend more than 100 bucks, but once I loan a coworker in need, and that did not work out so well.  It took many excuses and about a year later for me to get my money back.  I will only loan friends and family from that point on.

Evan @

"Right before you do something stupid, do the opposite!"

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4:28 pm
February 23, 2012



posts 271

Don't do it! Lending friends money, or cosigning loans for friends – it is just never a good idea. 

Daisy @ When Life Gives You Lemons, Add Vodka
Twitter: Add_vodka 

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