How do you remind someone they owe you money?

Be courteous and always use polite language when reminding someone about the debt they owe you. (even thought you really just want the money back). Just ask if they remember their debt and when they can pay it back. A good example sounds like this, “Hey, do you remember that I lent you money last month?

Should I remind my friend to pay me back?

The longer you prolong asking someone to pay you back, the more uncomfortable it’ll be. She also says that you should never feel bad to ask someone to pay you back. “It’s money that is owed to you that you loaned out of goodwill with the intention of being paid back,” she says.

Is it a good idea to loan money to a friend?

You might think it’s best to make the loan without interest. This is your friend after all. But, it’s a smart idea to keep this as a business arrangement. And that means you charge a reasonable interest rate. This way you are making something on your money. And your friend really gets that this is a formal business arrangement, interest and all.

Do you have to sign a loan agreement with a friend?

As much as you’d like to leave it to trust and friendship, a formal contract is the way to go. It can save a lot of headaches and misunderstandings. And a written agreement can clearly spell out all the “what ifs” that might blow up down the lending road. If you’re thinking “I can’t ask a friend or relative to sign a contract!”

When to abort a loan to a friend?

If you feel like your hands are tied or you’re being manipulated to lend a friend money, abort immediately. Doug Nordman, author of The Military Guide, shares about a loan to a relative that has become a tremendous learning experience along the way.

What happens if you loan money to a friend?

As a result, a handshake agreement with a friend or relative that is not in writing could lead to an inability to legally enforce the agreement for repayment. Another consideration is the tax consequence of a loan. If you receive interest from the loan, that is income and must be claimed on your taxes.

What’s the best way to lend a friend money?

You could offer to cosign a personal loan for a friend or family member in place of lending them money yourself—or you might let them use your credit card in a pinch. This way you’re not handing over any money out of pocket.

What does the law say about loaning money to friends and relatives?

The statute of frauds mandates that certain agreements must be in writing or they are unenforceable. As a result, a handshake agreement with a friend or relative that is not in writing could lead to an inability to legally enforce the agreement for repayment. Another consideration is the tax consequence of a loan.

Is it bad to lend money to someone you know?

Lending more money than you can realistically afford can only lead to problems if the person to whom you lent the money doesn’t repay it punctually or you have a harder time keeping up with your expenses as a result. It’s also important that you don’t allow guilt or other pressures to determine whether you lend money to someone you know or not.