Loaning Money to Friends

It is generally advised not to lend money to friends because if the money is not paid back you end up losing your money and your friend. Despite this I recently loaned my friend $2,000 to help buy a truck he is going to use for business.

I think this loan is a good deal for both of us and I am not worried about if for a couple of reasons. One is that I have known my friend for 14 years and feel confident that he will repay me. He has helped me out on a smaller scale several times in the past. Another is that the terms of the loan were clearly stated and we both understand them exactly.

He offered to pay interest and I am charging interest on the loan. I am making more than I would at the bank and he is paying less than if he had taken a loan from a bank. He may not have even been able to get a loan from the bank due to his poor credit.

There are very few people to whom I’d make personal loans. Especially if they were unsecured loans. Have you ever loaned money to a friend or would you? If you have done so, would you do it again?