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Ever loaned money to a friend or family member, even though you've known it was a bad idea since high-school "Hamlet" ("Neither a borrower nor lender be…")? So has everyone else. And most were stiffed when it came time to be repaid.
Ninety-five percent of adults say they've loaned money, according to an Internet survey by Jeanne Fleming and Leonard Schwarz, authors of "Isn't It Their Turn to Pick Up the Check?"
More than a third of survey respondents had loaned $1,000 or more. When it came to the largest such loan they had made, 43% said they hadn't been paid in full -- and nearly a third hadn't been paid at all.
Ipsos market research and commissioned by PayPal, 63% of respondents have seen someone skip out on paying back a friend, and 57% have seen a friendship or relationship end because of it.
We are more likely to lend money to immediate family members (71%) or relatives (57%) than to friends (54%), co-workers (30%) or roommates (20%).
There are perfectly good reasons to lend money to friends or family, of course. We like to be able to help out a friend or loved one faced with a health crisis, job layoff, divorce, business startup or college tuition shortfall. Unfortunately, our best intentions can quickly turn into hard feelings when the borrower fails to repay us.
Kim Izzo and Ceri Marsh, authors of "The Fabulous Girl's Guide to Grace Under Pressure," say handing over the cash without a repayment plan is a prescription for disappointment.
"Where people are too casual is, they don't state the terms of the agreement in advance. That's where you get into trouble," says Marsh. "I think people are a tiny bit embarrassed to finish that conversation; to say, 'OK, so when do you think you can pay me back? Great!'"
Izzo agrees. "They don't want to sound cheap," she says.
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Make it official
At the very least, capture these points in writing, even if it's on a cocktail napkin, before emptying your wallet:- The loan amount.
- The date of loan.
- The date or schedule of repayment.
- Rate of interest (if any).
- Collateral (if any).
- Both of your signatures.
Izzo and Marsh have studied the deadbeat ways of the young, single crowd closely. Guys, they say, are more inclined to be lenders so as not to appear cheap, while women tend to be more concerned with being fair. The biggest change from the previous generation may be that you're more likely to have friends in need of a loan today.
"Your social circle is a lot wider these days, and there is a lot more disparity now than maybe there was in the '60s," says Izzo. "Now, with women being in careers, and with guys, too, one friend might be a doctor and one might be a checkout guy at Safeway. I think that's changed the relationship to money. Where do we go for dinner? How do we entertain ourselves when we don't make the same amount of money?"
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Feelings can get frayed the longer a loan remains unpaid.
"To me, a month might seem like just around the corner, but if Kim is waiting for that $100 she lent me, that might seem like a long, long time," says Marsh.
Fortunately, there is a means today to remind an unresponsive borrower of their obligation without creating hard feelings: e-mail. If you made your loan through PayPal, the payment company will remind the borrower on your behalf to pay you back.
"I think an e-mail is nice initially because it's less confrontational," says Izzo. "If you're using PayPal, you can use their great reminder service so they can't pretend they didn't hear you or they forgot."
Talk turkey
If your e-solicitations prove futile, a frank exchange may be your only recourse.Rate this Article
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