I’m writing today about a topic that is the source of a lot of problems, and that is finance between relatives and friends.
When someone wants to buy something or is in financial need, the first reaction is to borrow it from their immediate relatives or friends.
Another, perhaps even more serious case, is when a bank borrows a bank, asking for a guarantor, and explicitly expecting us to guarantee our brother or best friend, because that’s all we can really do for him.
Particular mention should also be made of the division of property resulting from divorce.
Let’s take a look at the traps these everyday situations hold.
First of all, I want to disprove a myth: when you give someone a loan, most of the time, it will not be a blessing but a curse .
If your kid comes in, your granddaughter, your sister wants to buy a car but she doesn’t have the money, the worst thing you can do is give her a loan instead of highlighting the fact that she doesn’t have the money to buy her an early car .
If you really want to help him, pay for financial advice to find out that he has to live up to his options and not his desires. If you give it money, you are confirming the huge mistake of being able to achieve anything with real credit without real performance.
Money cannot be returned by the borrower
Another problem is that very often the money cannot be returned by the borrower and this will poison your relationships forever. Lots of friendships and even kinship are ruined by financial disputes and unpaid loans. My friends and relatives are worth more to me than losing them for fifty to one hundred thousand forints . How are you doing with this?
Think about the situation: you lent a million forints to the car mentioned above. The car is stolen or broken in two months. Or your friend loses his job, not to mention your credit, but he can’t even pay the overhead, let alone his other loans. This unspecified money is guaranteed to ruin your relationship forever.
Therefore, if a relative or friend asks you for a loan, tell him that your friendship is worth much more than ruining a couple of pounds.
If you still want to help, there is a solution: do not lend the requested amount, but a gift. But only if it doesn’t put you in a difficult position. If you find yourself in a difficult situation with a gift of this amount, you are not the right person to help.
If you do lend, always write it down. This is not distrust. Consider the following situation: You lend a well-to-do entrepreneur brother $ 10 million to buy a home, he only needs half a year to sell his other property. Three months later he dies in a car accident and his entire fortune is inherited by his two minor children, and all the money is immediately handed over by the ward. How are you going to get your money back without a contract? Can you prove that the money is not for the kids, but yours? Right?
People who get away with paying off their loans
Whether they are home loans or credit card loans, often ask for money. They think it is your duty to help people, but in most cases these loans are already unscathed and you only throw your money into a bottomless pit when you lend to such a person. In this apartment, which the bank is sure to take, it is unnecessary to add another hundred thousand forints just to make the inevitable end two months later. Here too, the real help is when you seek the help of a financial advisor for your friend. If there is a solution, a specialist will help you find it; if not, your money won’t help either.
Also, think about how someone who can’t pay the bank for months will know how to do it, especially if the bank also blocks their payment? Never decide on money when it comes to sentimental feelings.
And if your relationship broke down due to a non-repayable loan, release the debt . You won’t get the money back that way or that, but at least the friendship will.
Never give a guarantee!
Whenever someone wants to take a loan and the bank does not find his income satisfactory for the loan, he asks his borrower for a guarantee. This is when people rush to their friends or relatives to sign the paper.
Have you thought about what you will do when you are guaranteed for someone? There’s a man who wants to buy something he can’t afford. There are two proofs of this: you don’t have the money because you need credit, but you won’t even be able to pay the loan, according to the bank.
Hey, do you want to be financially responsible for such a bad credit? The message to your relative or friend is that you should not buy a flat, a car, whatever, because you can’t afford it and right. He has no money, no income.
Will you know if you are not paying your loan properly? No, the bank won’t notify you. Will you know if you don’t pay the insurance? If the car is stolen or smashed? If you lose your job? No no and no. You will only know when the loan has run out and the bank will foreclose on your payment or enforce your property on the guarantee. Some people find the bank after 10 to 15 years, and you don’t even remember ever signing anything. You haven’t seen that “friend” in the last 8-10 years.
When I was a mortgage administrator, it was common for a borrower to find that he or she was on the active BAR list while never having a loan. It wasn’t, he was just a guarantor of bad credit.
So, tree-to-tree simplicity: Never give a guarantee to anyone , whether your relative or acquaintance asks for it.
Divorce: Don’t just divide your wealth.
When divorcing, it is important that you arrange all material relationships, not just distributing wealth but also credit. The first sentence of divorced people in trouble is usually this: we agreed to keep the apartment and pay off our loans.
However, you do not pay and you were a debtor when you took out the loan, so the bank will send the bailiff to you, because nowhere is it that you are no longer living together. But a common credit card, a car loaned to a little girlfriend, and everything else is a devastating time bomb that will explode in as little as 20 years. (Remember, a home loan can last up to 30 years.)
Therefore, in the event of a divorce, you should also clarify the common loans so that you do not believe they will pay off. Keep the apartment, but write the credit in your own name. Keep the car, but take the lease and give your credit card. Don’t want a broken material life beside your broken heart.