Friends Want to Borrow Money

Rapt0r30 on 28/07/2020 - 15:49
Last edited 28/07/2020 - 16:18

Some friends have recently lost a car and need to replace it urgently but don't have the funds to do it themselves.
I have always been open with my finances and encouraging others to save instead of taking out a loans for things but their current situation means they will either have to try and borrow from a bank at a high interest rate or I can offer them something better

I've known them both for a while now and trust them with money although I just wanted to know what OzBarganers thought of the situation?

Financial

Comments

  • cuckchump on 28/07/2020 - 17:14
    +4

    why dont they go get car finance? its dirt cheap now…dont waste ur time handing out free money to friends and family…

  • DiscoJango on 28/07/2020 - 17:14
    +6

    Money & friends/family never works out.

    They will not pay you back in a week as promised, and you will become the bad guy when you ask for it back, as they will pull the victim string.

    Ps: dont be open about your finances… with anyone.

  • Marcsie on 28/07/2020 - 17:22
    +4

    Never lend money to a friend.
    You will loose both : A friend and Money !

  • Drakesy on 28/07/2020 - 17:23
    +5

    Should probably go looking for the car first, do they remember where they last had it?

  • ChunkyToast on 28/07/2020 - 17:32
    +1

    No.

  • fredk1000 on 28/07/2020 - 17:32

    They should of been like you and save some money too.

  • cashless on 28/07/2020 - 17:37
    +5

    As my old man was fond of telling me (I think it was from Shakespeare): Neither a borrower nor a lender be

  • sjtem3 on 28/07/2020 - 17:38
    +2

    Never lend money to friends/family.

    Consider giving them a generous gift of a (very) cheap car, or helping transport them while they accumulate the funds.

  • JimmyF on 28/07/2020 - 17:49
    +1

    Banks lend money for cars, not friends.

    • [Deactivated] on 30/07/2020 - 09:05

      Of course. They can take the new car as collateral. The banks cannot take your new friend.

  • Cluster on 28/07/2020 - 17:55

    Have your friends approached you for a loan? If not then answer is easy: Do not offer them a loan.

    If they have approached you for help then that gets tricky. Only lend the money if you can afford to gift it to them. It's also a good lesson in remaining completely silent about financial matters with friends. I know you're trying to help by offering advice but that can also put you in a very difficult bind.

  • tessel on 28/07/2020 - 17:56
    +2

    No. /Thread

    • Yorkshire-Man on 28/07/2020 - 18:07
      +3

      This. OP is AWOL anyway.

  • OzCheapo on 28/07/2020 - 17:59

    Either encumberance on their home or lien on it.

    To be honest, interest rates aren't exactly high unless you solicit a loanshark.

  • Mokr on 28/07/2020 - 17:59
    +2

    Ask your friend to do a go fund me via facebook.

  • Munka on 28/07/2020 - 18:09
    +19

    Ok so here's how lending money to friends work.

    1. You give them no more money than you can afford to forget about.
    2. They agree to pay it back when they can.
    3. You forget about it altogether, don't even write it down, mention it ever again. Don't ever ever make it seem like you were the bigger person for giving money and don't ever pretend it was ever more than a bit of a favour.

    If they are good people they genuinely will pay it back when they can. And having another debt may make them resent you or unbalance the otherwise equal relationship.

    If you can't follow that above, simply don't do it. I did it once for a friend's child's medical bill (out of pocket after Medicare). Every few months she will wire me another $50 or so. At this rate we will both be old and frail by the time I get it all back. Despite me sticking to rule 3 I still wouldn't say we're as close as we once were. We chat now and then and she always feels she needs to let me know she will pay it back, to which I say don't make your situation uncomfortable by doing so, I'm fine without it for now. Still, there is definitely an impact and I actually wonder if we'd still be as close if I hadn't lent the money.

    • trapper on 28/07/2020 - 22:20
      +1

      The only time you mention it again is the next time they ask for a loan.

      Now you can bring it up! and you won't need to feel bad about not helping out this time. :D

      • Zachary on 29/07/2020 - 12:43

        Friend: "Hey mate, I'm in a bit of a pickle, can I have like $10k?"
        You: "$10k, huh? Hmmmm…..hmmmmmmmmmmmm….. 🤔 Sure, after you fully pay back the $20k you still owe me from 30 years ago."
        "Friend: "Wait, what $20k….?"

        • trapper on 30/07/2020 - 12:06

          Make the first loan $50.

          That a good debt to let slide to save you thousands later.

  • waletmoro on 28/07/2020 - 18:09

    It's like there's no more friend anymore.

    • SnakeCasablanca on 29/07/2020 - 10:16

      There isnt for anyone who has loaned their friends money and actually expected to get it back and were upset when they didnt.

  • gromit on 28/07/2020 - 18:10
    +7

    Learnt my lesson on this the hard way many many years ago. NEVER loan money to a friend, when things go bad you lose the money and the friend. Cost me $10k and a good friend to learn that back in the 90's, ironically for the exact same scenario you have. The hassle, the stress, loss of sleep and the risk just aren't worth it for the tiny amount they save by not going to a bank, do them and yourself a favour and direct them to a bank, if they have already asked just say you value their friendship too much to risk it over money or you can't currently afford.

    Also if they are slugged for VERY high interest rates with a bank it means the bank also considers them a very high risk. Also remember even if you can afford to lose the money think of what it does to them if they can't pay you back, not being able to pay the bank is stressful, screwing over a friend for most is even more stressful.

    • tessel on 29/07/2020 - 18:42

      If they don't pay you back I'm certain they wouldn't give a shit. However, bang on with everything you said. Don't lend friends money.

  • Misterpompom on 28/07/2020 - 18:16
    +1

    I remember the times that I used to lend money to friends (one of which was the scenario you raised).
    Some of my life lessons (sometimes most expensive) were encountered here and nearly left me homeless in my early adulthood but glad I got through it.
    In short don't lend money if you can't afford to lose it.

  • garetz on 28/07/2020 - 18:23
    +11

    A real friend will never ask to borrow money from you.

    • capslock janitor on 28/07/2020 - 22:42
      +2

      However a true friend could, and they'd pay you back.

    • Froot Loops on 30/07/2020 - 01:33

      I disagree. A true friend may ask to borrow money in certain circumstances. They may have lost their job and many need some help with cash for food or have fallen on hard times and require some assistance. I borrowed $100 no long ago off a friend as I lost my ING card and was awaiting a replacement. I paid them back 3 days later. It all comes down to circumstances. A wouldn't lend, nor ask for a car

  • Blue Cat on 28/07/2020 - 18:33

    Don't do it.
    If you agree, then you deserve to lose the money you "lent" to them.

  • Shiny Mew on 28/07/2020 - 18:34
    +1

    Well, the good thing is that these days you don't need much more than $3k to get a good, reliable car with low running costs (see, eg, second-gen Suzuki Swift).

  • Aneurism on 28/07/2020 - 18:35
    +1

    Lost 3k to a friend…and they are a friend no more.

    • Zachary on 29/07/2020 - 12:45
      +1

      rip gg

  • Seraphin7 on 28/07/2020 - 18:36

    If you want to donate the money to them, then fair enough.

    I wouldn't go anywhere near loaning money to them.

  • Excelsior on 28/07/2020 - 18:36

    Bottom line: treat your loan as a charitable donation to your friends.

  • Caped Baldy on 28/07/2020 - 18:43
    +5

    How does one lose a car?

    Don't they have family that they can ask for money?

    Did the family say no? Maybe they know something you don't.

    Do they work and have stable employment?

    • holdenmg on 28/07/2020 - 19:48
      +4

      Dude, Where's their Car?

      • wombok2 on 28/07/2020 - 23:16
        +4

        and then?

        • [Deactivated] on 29/07/2020 - 10:03
          +3

          No "and then"!

  • team teri on 28/07/2020 - 18:47
    +3

    Lots of good points made by others already. Yes, money and friendship can be tricky and if there's no need for it, don't make things complicated. If they can easily get a loan from a bank, that's the way to go.

    That said: circumstances differ. Friendships differ.

    Some circumstances in which I might help my really good friends:
    * if they lost their car in an accident that is covered by insurance, and they only needed help to tide them over until they receive the insurance payout, that would be something I would consider
    * if the friends are really down on their luck and can't even afford the $3k cheapy mentioned above, and at the same time they actually desperately need a car (i.e. to keep a job), in that case consider gifting them the money, or a cheap car

    In any case, consider it a risky investment. Don't gamble more than you can afford to lose. Then the worst case is an expensive lesson.

    • gromit on 28/07/2020 - 20:41
      • if they lost their car in an accident that is covered by insurance, and they only needed help to tide them over until they receive the insurance payout, that would be something I would consider

      LOL that is exactly how I lost a friend and $10k in the 90's. Thing was their insurance ended up not paying due to various circumstances. basically you should consider anything you loan to a friend as a gift, thinking it is money you will never see again then maybe you will be able to get past them not paying it back.

  • superuser on 28/07/2020 - 19:05

    ah, money…
    How much are we talking about here?
    Under 5k? 5k-10k?, it depends, real friend will pay you back,
    Where is the vote?

  • Surfer Dude on 28/07/2020 - 19:06
    +1

    You're 20 years old so I'm assuming your friends are also 20 +/- 2 years and haven't got their sh!t together enough to ask to borrow money from you, is this correct? If so, I say go for it mate, you'll either learn a lesson that may shape future you, or you'll earn immense amounts of trust from this friend that may shape your future self. Either way, take the punt and if you lose, don't lose the lesson.

    Do consider their job prospects and general financial discipline (especially if they're in their early 20's.. Not much 'service industry' jobs around these days.

  • monky on 28/07/2020 - 19:11
    +1

    na

  • Vote for Pedro on 28/07/2020 - 19:14
    -1

    Nope. Money ruins everything

  • dcash on 28/07/2020 - 19:23

    Never loan money. Give it away if you want, but don't loan it.

  • [Deactivated] on 28/07/2020 - 19:30
    +3

    I've lent friends money many many times and have had 0 issues, including purchasing a car at $8000 for one of them, in saying that, I ALWAYS go out of my way to offer lending it to them, not so much them ever asking for it

  • capslock on 28/07/2020 - 19:46
    -4

    OzBargainers seem to be a very tight bunch. Not a single person (so far) are willing to happily lend their friends money.

    • [Deactivated] on 28/07/2020 - 20:18
      +2

      Read all the comments champ.

    • space cadet on 28/07/2020 - 22:46
      +2

      Lend? No.
      Give? Yes.

      The point is that if you can't afford to just give your friends the amount of money they are asking for, then you shouldn't lend it to them either.

      Or put another way, if the amount your friend is asking to lend from you is trivial enough to you that you wouldn't care if they missed some payments or never paid it back at all, then just give it to them instead.

  • Pinkster on 28/07/2020 - 19:54
    +5

    No, just no.no no no no no and then no. It never ends well.

    They borrow money…. Buy a car…. We'll pay you back as soon as possible…..you go to see new car and also notice new tv in lounge…..hmmmm that's weird you think……never see money again

  • redslert on 28/07/2020 - 20:00

    You will not see that money ever again.

    Your friends would be like… I have no money to pay you back, Rapt0r30 you can afford it just forget about the money.
    Then ghost you.

  • Melb69 on 28/07/2020 - 20:16
    +1

    Only give it away and don't expect it to be repaid. If they are that hard on cash for a replacement car may be they can sell something to get some cash. IMO. You will always be wondering when they will repay it even if you write up something. It's just not worth it to lose a friendship out of it if it goes bad. Even If they don't mean to not repay you.

    I just don't want you posting another thread saying how to get money back from your friends.

  • giles on 28/07/2020 - 20:17
    +1

    If they really need the car as urgently as you say, and you want to be generous, you could consider offering to pay the base cost for a rental car on their behalf — an outlay of maybe $300–350 for 3 weeks.

    I would not suggest putting down your credit card as liability for any extras (eg insurance, tolls, late fees).

    Call it a gift and, if they pay you back at some point, great. If you can't spare never getting the money back, then don't make the offer.

    This'll give them a little breathing space to hunt down some value in the second-hand car market, sort out a car loan, and perhaps get the refund from the rego of their 'lost' car. You achieve your aim of helping them out, and even helping them by maybe lowering their loan costs — but you save the heartache of being their bank manager.

  • itstuan on 28/07/2020 - 20:31
    +1

    Consider you already lose the friendship whether you want to lend the money or not. They can afford to take public transport. Its not a matter of life/death.

  • iDroid on 28/07/2020 - 20:32
    +2

    If they can't raise a small amount of money to get a cheap car to get them through, then I can't see how lending them will help in the end.

  • whooah1979 on 28/07/2020 - 20:36

    Give them a link to RateSetter. They just changed the rules to make their borrowing rates more attractive.

  • loropy9 on 28/07/2020 - 20:37
    +5

    Op is gone. Abandoned us all here with our precious advices.

  • kaleidoscope on 28/07/2020 - 20:38

    If they have a steady stream of income then perhaps. How much are we talking? (i.e. if they’re looking for deposit for a car or they want $15-20k for sale price etc)

    I’ve borrowed from friends at time of need and paid them off in 3-6 months as agreed and have returned the favour when they were in need too.

    My advice;
    As mentioned above if you know them really well and it’s reasonable amount that you won’t need back urgently and most importantly they have continuous income; then consider it. Else try to avoid.

  • Tiredman on 28/07/2020 - 20:46
    +1

    Seriously no. I loaned money to two of my friends and now we are not even talking anymore. Small money but still.

  • skido on 28/07/2020 - 20:46

    I would say it depends on the level of trust in your friendship and how well you know that person (are they a big spender? do they have a stable income to pay it off?). I know incredibly generous people who have lent money to friends and their friends have paid every cent back on time.

    • gromit on 29/07/2020 - 12:32

      It isn't so much the loss of money that is the problem (though that is an issue too), money relationships when they go sour take the friendship with it and even honest people with the absolute best of intentions have unforeseeable things happen in their life that can stop them paying it back. So you lose double and all to save a couple of bucks with a bank. I would never loan money to a friend again, however I have given money to a friend for his motorbike repairs after an accident, never asked for or expected a penny of it back but he did return it all, had he not it would not have hurt friendship, A loan is an entirely different matter though.

  • G4life on 28/07/2020 - 20:49

    If you consider them your bff lend them whatever and forget about it because money shouldn’t get in the way of true friendship, but if not straight up no.

    Too much hassle and stress chasing money from a friend.

  • DashCam AKA Rolts on 28/07/2020 - 21:03
    +1

    Lending money to friends risks losing one or the other; or in the worst case both.

  • ozbaragan on 28/07/2020 - 21:03
    +1

    Should add poll Yes or No just to see if there is any YESs. I agree NEVER LENT MONEY TO FRIENDS AND FAMILY. It's basically a write off. He should get a really cheap car just to get by as starter or use public transport. I hate lending money to someone then seeing him on instagram living lavishly on fancy items or fine dining while Im eating my frozen meal and he "forgot" to pay me back.

    • KSMLJ on 28/07/2020 - 22:46

      Sounds like you have seen things.

      • kaleidoscope on 29/07/2020 - 12:33

        or had bad friends and u trustworthy family

    • Bayleaf on 29/07/2020 - 00:37

      Been there, seen that :(

  • Ghost47 on 28/07/2020 - 21:04
    +3

    I've lent a few thousand to a good friend before, they paid me back. It is a risk but if you trust them and are good friends with them, no issue really.

  • Miss B on 28/07/2020 - 21:34
    +2

    I've loaned up to a couple grand to friends/family, usually smaller amounts. I wouldn't like it if I didn't get it back, but I only loaned money to people I'd still love if they didn't pay it back. They always paid it back in full. A few times some of the repayments agreed were not able to be paid on time, but I wasn't relying on it for anything and I knew they'd be paid in time. I also did not concern myself with what they were doing with their money. No relationships were impacted. Only you can decide if you want to loan them money.

  • Doggiie on 28/07/2020 - 21:52

    encouraging others to save instead of taking out a loans for things

    And yet they have reached a situation where your encouragement did not work.

    You attempted to help them in the past to get ahead, but they chose not to take your encouragement. There won't be much guarantee for you getting your money back soon or ever from them.

    Only loan money you're willing to lose. Or lose the friendship. They can learn from their mistakes not saving by taking out a higher interest loan. That'll "encourage" them to learn to save in the future :)

    • trapper on 28/07/2020 - 22:03

      Even if he is willing to lose the money it will still almost certainly cost the friendship if the friend doesn't pay it back.

    • Mr Haj on 28/07/2020 - 22:03

      Encouraging them to save while providing them a loan… The two are contradictory of one another haha

  • [Deactivated] on 28/07/2020 - 21:56

    Definitely not! No way. Nope.

  • trapper on 28/07/2020 - 22:00
    +4

    No, don't loan large amounts of money, that is what banks are for.

    The interest will not be high for a relatively small personal loan that is going to be paid back fairly quickly anyway.

    The only exception would be an emergency situation where it is not possible to get a bank loan.

    edit: Here's an example.

    Commonwealth bank, secured car loan, interest rate is 6.99%

    Borrow $10k for one year and repayments are $200pw, so total repaid over 52 weeks is $10,400. That is only $400 interest for the whole year… $7.70pw in interest.

    • TEER3X on 29/07/2020 - 10:13

      That's pretty good!

  • Aussiebro on 28/07/2020 - 22:05
    +2

    Just be weiry about friend and money and stuff like that. I'm young and have already lost a few friends over money. I've been scammed b4 by supposade friends to. If I was u I would keep quiet and let them go through a bank. It's tiring being a hero to people and then for them to shit on you (me)

  • Tripnfelt on 28/07/2020 - 22:15
    +1

    It depends, do they urgently need this car for their volunteer humanitarian work etc?

    Where exactly are they travelling to anyway during lockdown?

    Else lend them the money for a myki/opal card If you have it.

  • Milk tea on 28/07/2020 - 22:16

    Don't do it. Everything you see them or talk to them you will think about them needing to pay you back

  • cloudy on 28/07/2020 - 22:17

    If you loan a small amount of money to a friend, that's money well spent.

    People make it out as a bad thing, but anyone that runs away for a few grand isn't a friendship worth having.

    • gromit on 29/07/2020 - 13:33

      Doesn't have to be them running away, many things in life can render someone unable to pay it back or putting you down the list of beneficiaries, death, illness, accident, loss of job, family problems etc etc. The list is almost endless of the things that could prevent a completely honest well intentioned friend from honouring their commitment leaving you in the lurch. Give to a friend fine (if they are a good friend they may pay it back), don't loan.

      • cloudy on 29/07/2020 - 19:11

        Yea, no one said there's no credit risk with any transaction.

        If you lent it to a friend and they died or had a serious illness, would you be asking for it back? If you did, i'd say you are the person who is not worhty being the friend.

        • gromit on 30/07/2020 - 07:34

          Hence don't loan to a friend unless you are happy to lose the money

    • Milk tea on 29/07/2020 - 19:59

      Not really money well spent if you could have used it for something you need yourself and for them not intending to pay you back

      • cloudy on 29/07/2020 - 21:09

        I'd happily give up a year of milk teas to find out who my real friends are.

        • Milk tea on 30/07/2020 - 00:10

          Hmm that sounds fair I think

  • this is us on 28/07/2020 - 22:39

    Only do that if you could accept that you might never see the money again. I don't recommend, but that's a very personal decision.

    If I had a lot of money that I didn't need and one of my best friends needed it, I'd consider helping/donating and never talk about that again, which is probably healthier for both parts. I'd be very clear saying that I'm giving the money and that my friend doesn't have to worry about paying back.

    If some day my friend moved to a better situation and wanted to pay me back, spontaneously, I would accept as I believe my friend would feel better this way.

    Lending is much more complicated.

  • capslock janitor on 28/07/2020 - 22:44
    +4

    friends have recently lost a car

    My condolences to your friends.

  • Jugganautx on 28/07/2020 - 23:05
    +1

    im sure your friends can sell $1k worth of items to buy an old car to get on their feet again.

    But im going to bet they want to borrow 5k because people are stupid.

  • Jalif on 28/07/2020 - 23:21
    +1

    There's 3 options here.

    You lose a friend, but they pay the money.
    -by being a creditor, you become creditor first friend second.
    You keep a friend but lose the money.
    -when they can't pay,which is likely because they have no savings, and you write off the debt.
    You lose both.
    -this is more likely than either option.

  • TheBird on 28/07/2020 - 23:36
    +1

    There's always people you can lend money to and those you cannot. Unfortunately, those who you can lend you usually are the very people who don't need to borrow money in the first place.

    If you do go ahead with the loan, consider one thing. Don't lend them any amount that can get them into trouble paying back. For example, if they're not the kind of people who can repay a $500 debt, it's foolish to lend them $1k+. You'll only get them in trouble. In that case, if you do go ahead with it, consider it a gift. If they repay it, you learn a little more about them.

  • extract on 28/07/2020 - 23:58
    +1

    How do you lose a car?. Did they forget where they parked it?.

  • Kamsi on 28/07/2020 - 23:59
    +2

    Never lend money to good a friend unless you want it end the friendship. I learned from my mistake long time ago.

    • Bayleaf on 29/07/2020 - 00:35
      +2

      I'm kind of in the same boat. But I don't think my friendship was ended, I'm more like we were never genuine friends because friends won't take the others money and run away without explanation.

  • bigbadboogieman on 29/07/2020 - 00:28

    I lent about 1K to a friend in Jan 2019 and have a written SMS acknowledgment that they owe it. I haven't asked for it and they haven't returned it. Guess the bright side is that they can't ask for any more.

    We are still friends but I guess we both know the moment I bring that up would be the moment we would stop being friends so I keep quiet because I value the friendship more than the money.

    If you value their friendship then "lend" the money but silently consider it a gift. You keep the friend and they never ask for more money or worse case if they do ask, you get to say no because "you got none saved on the side anymore".

    • Raj09 on 29/07/2020 - 01:12
      +4

      Yep it is sad that it turns like this. You feel bad for asking too be paid back. However they didn't feel that bad asking in the first place

    • zombrex on 30/07/2020 - 16:53
      -1

      You should man up and ask for your money back.
      If your friend has made absolutely no effort to pay it back despite earning money and spending it on things they don't need like alcohol, fast food, entertainment and so on then they are not a good friend.

      • bigbadboogieman on 30/07/2020 - 23:39

        Nah I am good thanks.

        • zombrex on 30/07/2020 - 23:47

          Ok good for you, but pretty pathetic.

          • bigbadboogieman on 31/07/2020 - 01:08

            @zombrex: I understand that you probably commented with the best of intentions and thanks for sharing your honest opinion mate. I am guessing you related to my situation at some level and therefore bothered to post a comment on a complete stranger's story but I think you're jumping the gun.

            I know for a fact that my friend has not spent a single cent on Alcohol, may be a little on entertainment because he's got 3 kids. Yes he earns and can potentially pay me back but I am not dying without my 1K and he's knows that so yeah….

            The intention for sharing the story was to share a real life experience with the OP of this forum post and what to expect if he decides to lend the money to his/her mate.

            • JelIyfish on 31/07/2020 - 08:27

              @bigbadboogieman: I say good on you.
              The only thing I’d change in your situation is just make it a gift from the beginning. At least then there is no awkwardness about the whole process.

  • Bayleaf on 29/07/2020 - 00:31
    +2

    Speaking from my personal experience: Don't do it.
    The attitude of debtor and your relationship with the debtor WILL CHANGE after you lend out the money.
    Also, will you be able to accept it if you find out that your friend actually has enough money to pay your back but rather not paying you back? (This happened to me)
    I feel like financially you might be ok if your friend doesn't pay you back eventually, but emotionally/mentally are you able to cope with the betrayal and the loss of friendship? This is actually the part that is bugging me, but I'm handling better nowadays.

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