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    • Former MSE Wendy
    • By Former MSE Wendy 10th Mar 09, 3:13 PM
    • 868Posts
    • 1,782Thanks
    Former MSE Wendy
    MONEY MORAL DILEMMA. Should Tina lend to close mate Stina?
    • #1
    • 10th Mar 09, 3:13 PM
    MONEY MORAL DILEMMA. Should Tina lend to close mate Stina? 10th Mar 09 at 3:13 PM
    Here's this week's hypothetical situation for you to cogitate on:

    Should Tina lend to close mate Stina?

    Stina has 3,000 on a credit card, it was at 18%, but the card company's hiked it to 29.9% due to the credit crunch. Having always been able to repay, now she's worried, and sadly her score isn't good enough to do a balance transfer. She tells close friend Tina, who had been complaining that her savings were now earning just 3%. Stina suggests Tina lend her the cash instead to clear the card and she'll pay her 6% interest, a win-win all round? However is lending to a friend ever that easy?

    Click reply to have your say

    Previous MMDs:
    Should Rachel return the dress?
    Should Janet pay for John?
    Would you buy your neighbours' repossessed house?


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    Last edited by Former MSE Wendy; 10-03-2009 at 8:19 PM.
Page 1
  • BlueAngelCV
    • #2
    • 10th Mar 09, 10:06 PM
    • #2
    • 10th Mar 09, 10:06 PM
    No definitely not. You only need to read the threads on here to realise that lending money to friends and family is a bad idea.
    Plus, why does she have a bad credit rating? She's obviously not great with money.
    Even if she is totally reliable and not the sort of person to disappear (like some people I've read about on the forum) you never know what's going to happen. You might become unemployed & need the money. She might become unemployed & not be able to pay it.
    The only person I would lend that sort of money to (If I ever get into + figures!) would be a long term partner.
    Wedding 5th September 2015
  • ambyuk
    • #3
    • 11th Mar 09, 7:08 AM
    • #3
    • 11th Mar 09, 7:08 AM
    No, she shouldn't, what happens if she loses her job or something and can't make payments?

    On the other hand, I applied for a 0% balance transfer offer and was declined. No idea why, I don't have a huge amount of debt, my hubby makes good money, and we always pay well over the minimum payments on everything!

    • Dorrie
    • By Dorrie 11th Mar 09, 7:14 AM
    • 66 Posts
    • 46 Thanks
    Dorrie
    • #4
    • 11th Mar 09, 7:14 AM
    • #4
    • 11th Mar 09, 7:14 AM
    Strangely enough I just read a similar dilemma in this month's Candis magazine - should you lend to a friend? Two people had - one friend signed a contract but then never paid anything and had to be taken to court, but still didn't pay and was eventually declared bankrupt. The other person repaid her friend as agreed a certain amount each month and they have remained firm friends.

    Personally I have lent money to a friend and she repaid me within weeks, but it was nowhere near the amount quoted here. I would be reluctant to lend thousands (even if I could afford it) and would suggest this friend seek professional advice from a Debt Advisor (oh, hold on, that's me!!). Seriously, I would encourage her to write to her credit card company to get the interest frozen, draw up a budget for her, etc.
  • ailuro2
    • #5
    • 11th Mar 09, 7:15 AM
    • #5
    • 11th Mar 09, 7:15 AM
    no she shouldn't unless she can afford to lose 3K and a friend, she should offer to help her pal look at her budget to see where she's overspending and thereby up her payments on the card.

    For herself, she should check out MSE for the best ISA rate to get more for her money, or overpay her mortgage if she's on a fixed rate.

    Quickest way to lose friends is to lend them money....
    Member of the first Mortgage Free in 3 challenge, no.19
    Balance 19th April '07 = minus 27,640
    Balance 1st November '09 = mortgage paid off with 1903 left over. Title deeds are now ours.
  • spudz
    • #6
    • 11th Mar 09, 7:32 AM
    • #6
    • 11th Mar 09, 7:32 AM
    Definetly not a good idea to lend large amounts of money to friends. It can potentially lead to problems with the friendship in the future if the person loses their job and can't keep up the payments. As someone else has already mentioned why has she got a bad credit rating? Obviously she's had trouble in the past keeping up payments.
    • forestlands
    • By forestlands 11th Mar 09, 8:07 AM
    • 103 Posts
    • 55 Thanks
    forestlands
    • #7
    • 11th Mar 09, 8:07 AM
    • #7
    • 11th Mar 09, 8:07 AM
    No, agree with all above! I lost 2K like that.
  • Money_saving_Martyn
    • #8
    • 11th Mar 09, 8:16 AM
    • #8
    • 11th Mar 09, 8:16 AM
    Caution!

    You risk losing a friend. My nan always told me from an early age "A borrower nor a lender be" (though I do go for deficit banking and cashback credit cards - the money is just just there waiting to be paid back ) since it's the quickest way of stopping people talking to you, presumably because people avoid talking to you if they've not got your money!

    The only way I would consider it, is if a friend could "pawn" me something or somethings that will keep most of their value for the agreed period of the loan. If they don't pay, you sell it and write their debt off. At least the lender doesn't lose out and had made some effort to help.

    Even so, you risk arguments when you start selling their stuff on Ebay..... probably best to avoid.
    Please note: I am NOT Martin Lewis, just somebody else called Martyn that likes money saving!
  • docric
    • #9
    • 11th Mar 09, 8:33 AM
    Bank of Tina
    • #9
    • 11th Mar 09, 8:33 AM
    If Tina were to lend to Stina and accept interest with repayments, would she not be liable to income tax on the interest? On the other hand, should the friendship wither on the vine, could Tina apply to HMG for a rescue package? "Neither borrower nor lender be" is the adage, but I bet lots of parents are lending to their children, in which case, be generous and waive interest.
    • geri1965
    • By geri1965 11th Mar 09, 8:49 AM
    • 8,366 Posts
    • 14,004 Thanks
    geri1965
    I wouldn't lend that amount of money, no.

    I've lent smaller amounts to a friend (500 or so) who I've known for 20 years - he always pays it back when he says he will. He lent me 2,000 when I moved into my house, to pay for furniture and stuff, and only asked for 800 back.
  • kwmlondon
    What I'd do
    If my friend was unable to make the payments what I'd do is sit down with them, work out how much they could afford to service and gradually pay off and then lend them enough money to take their debt down to that amount. In the case of 3k it would probably mean lending them about 1,000. I would explain that I'd be losing interest on this and they'd be making money so we would split the difference and come to a mutually beneficial agreement, but I'd be happy to give them a payment holiday of a few months to get them on the road to paying back the credit card debt.

    My attitude is that I can afford to lose 1,000 in the grand scheme of things. I would be prepared to give that money to a friend in trouble so if something terrible happened and they could not pay back (lost their job, for example) then it would not mean financial problems for me. What I was taught as a kid is never to lend money you cannot afford to lose. This means I've never lost a friendship through money.
    • pineapple
    • By pineapple 11th Mar 09, 9:30 AM
    • 6,312 Posts
    • 30,275 Thanks
    pineapple
    Maybe I would point her to this site and the articles about using a cheaper credit card temporarily to pay off the more expensive one!
    However, I don't 'do' credit cards so maybe I'm biased but I would be worried how she got to owe 3,000 in the first place. IMO it doesn't augur well for her paying me back. Plus as someone said, what happens if she loses her job etc?
    I'm not totally against lending a friend money (depending on the amount and my own solvency) but I would be more inclined to do so if it was a sudden emergency not of their own making.
    • Billy-no-Money
    • By Billy-no-Money 11th Mar 09, 10:46 AM
    • 320 Posts
    • 341 Thanks
    Billy-no-Money
    As someone who was stung by just such a scenario (but it was 34.9%!) even I wouldn't ask a friend to help me out.

    However - my wife (married six years, together ten) did do that and it was a lifesaver. I pay her at 7%, we're now 18 months into a four-year arrangement.

    The difference is that she knows my full financial picture, she knows it's in our joint interest to sort it out, and if I do lose my job and can't pay her back we're jointly in a better position than if I'd still had a 34.9% credit card bill that wasn't reducing.


    I probably feel more awkward about accepting her help than she does about offering it but it's the one thing that's really helped me break the back of my debt situation - it can only work as part of a calorie-controlled diet!

    <edit: some people are coming to the conclusion that Stina's not very good with money, and her credit rating is 'poor', because she can't get a balance transfer. I don't think you can assume that to be the case - one big change in the credit crunch is that people who have clean records now can't get credit, and that previously manageable debt levels are suddenly unmanageable because of interest rate increases. Doesn't mean it's right to lend to a friend - just that some old assumptions are no longer true>
    Last edited by Billy-no-Money; 11-03-2009 at 12:47 PM.
    Long-haul Supporters DFW 120
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  • Sagi
    Absolutely not. The fact that Stina has a credit card bill that she cannot pay and that her credit rating is too poor to get a balance transfer shows that Stina is not good with her finances or at paying off debts. Lend her this money and Tina will lose her cash and a close friend. If she wants to help Stina she should sit down with her and help her to sort out her finances.
    • funandfrugal
    • By funandfrugal 11th Mar 09, 11:58 AM
    • 45 Posts
    • 33 Thanks
    funandfrugal
    No no no
    My Partner agreed to put a season ticket on his credit card for a friend 4 years ago as his friend could not get credit. Now there is still 1800 outstanding, there have been 3 late payments and the interest is huge. We have no debts but this was taken into account when we applied for a mortgage - greatly reducing the amount we could borrow. He pays off 60 per month, of which interest is 20, at this rate it will be anther 5 years before its clear. His friend is still his friend though! Never ever lend to a friend, I would never borrow from one as you cannot guarentee you'll be able to pay it back
    • ringo_24601
    • By ringo_24601 11th Mar 09, 12:18 PM
    • 17,148 Posts
    • 27,896 Thanks
    ringo_24601
    My mum always told me "never mix friends and money".
  • MsChievousness
    Definitely not for 3k. Yes if it was for a smaller amount to a very, very good friend. I would rather not lose friends or money. Sometimes the two just don't mix.
    I have to get back to work, when I stop rowing the slaveship goes round in circles.
  • mb232
    Never "lend" more than you would be willing to give as a gift
    When thinking about lending to friends and family, never lend more than you would be willing to give as a gift if they were in enough trouble. It's that simple. Even so, it is best avoided, as people you trust can turn out to be surprisingly bad with money or behave differently where money is involved, and it has the potential to ruin relationships. However if there is no viable alternative, never lend more than you'd be willing to give as a gift, and take seriously the possibility (with all possible consequences for you) of not getting any of it back.
  • Becca-Lou77
    It seems like you and your friend have a good friendship. My friend and I are exactly the same, I would lend her anything and she would never let me down, vice versa... But not everyone is like that, some people are selfish and when things are not in their control they just focus on number one : (
    • Casanova
    • By Casanova 11th Mar 09, 1:16 PM
    • 50 Posts
    • 45 Thanks
    Casanova
    For a proper friend, or immediate family member, then without hesitation (as long as the lender can afford it).

    I was very lucky to be able to borrow money off my best friend to do a Masters. He put no restriction on me paying it back, for which I have set myself a payment plan over 8 months now I am earning (off the back of that Masters). There will be no formal interest paid, but I'll take him on holiday or something to repay the favour.

    Within our family we are constantly lending money - if you trust someone and can afford to do so, then it is heartless not to.
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