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pay off close friends' debts I think it would be a better idea to loan them money to pay off their debts. Of course, your loan should be interest free, should

by vijayr 17y ago

pay off close friends' debts I think it would be a better idea to loan them money to pay off their debts. Of course, your loan should be interest free, shouldn't have any strings attached, should give your friends very long time to repay - otherwise there wouldn't be any difference between your loan and the 'other' loans in the first place.

hnal943 17y ago
Loaning people money is the best way to turn your friendship in to a business. The borrower is slave to the lender; why would you want that dynamic in your friendship?
- vijayr 17y ago
  No, not always. It becomes a business when 1) you charge interest 2) you have some terms and conditions or attach some "strings" 3) you require collateral 4) you make your friend sign papers, and you leave "legal" options open When I loan a friend, all I say is "dude, this is just to help you, I know you are going through tough times. No way this is to insult or patronize you. you can return the money when you can, even if it takes you 5-10 years" That is trust and friendship, one friend helping the other, nothing more nothing less and definitely not a business.
  - doki_pen 17y ago
    It's bullshit. Invariably lending money to a friend leads to resentment. You are putting a dollar amount on the friendship. If they don't pay you back, will you still be friends? if yes, then why not just give them the money?
    - yalurker 17y ago
      False dichotomy. You don't have to say "we're not friends if you don't pay me back" but you can still want to be repaid. Who here hasn't loaned a friend a small sum of money? My friends and I are constantly in debts of 20 or 30 dollars to each other. I've had a friend/roommate owe me a month's rent without any problem. At no point were we every "putting a dollar amount on the friendship". It's often a bad idea to mix friends and business/money. That doesn't mean it is always a bad idea.
    - vijayr 17y ago
      Its just like borrowing your friend's car. You use it for a weekend, and return it back, don't you? Does your friend take "deposit money" from you for it? Does he charge you "rent" for using his car? No. That is the difference between your friend and a rental car company. You are putting a dollar amount on the friendship Nope, I am not. All I am saying is, if I am in a better position than my friend, and he needs help, I am willing to help. He has to borrow money from someone anyway, why not from me, interest free and trouble free? He can sleep peacefully at night, knowing that I wont foreclose his house or something, if he is going to be late in repaying, or even if he is not able to repay at all. If they don't pay you back, will you still be friends? Yes. We are talking of FU money here, and also assuming that I am in a situation like Mint founders. I am in a position to loan money, without affecting my own lifestyle. Obviously, if I am myself living paycheck to paycheck, this won't apply. why not just give them the money? because, I don't want to patronize them, and don't want to insult them. Frankly, I don't understand why you call this bullshit. Loaning money to friends happens all the time. I've done it many times, and have always been repaid.
vl 17y ago
Ironically, giving interest-free loan can produce complicated tax implications. It seems that loaner potentially may be taxed on the difference between 'reasonable marker interest rate' and (in this case) 0%. Receiver may potentially become liable for gift taxes.

by vijayr 17y ago

hnal943 17y ago

Loaning people money is the best way to turn your friendship in to a business. The borrower is slave to the lender; why would you want that dynamic in your friendship?

vijayr 17y ago
No, not always. It becomes a business when 1) you charge interest 2) you have some terms and conditions or attach some "strings" 3) you require collateral 4) you make your friend sign papers, and you leave "legal" options open When I loan a friend, all I say is "dude, this is just to help you, I know you are going through tough times. No way this is to insult or patronize you. you can return the money when you can, even if it takes you 5-10 years" That is trust and friendship, one friend helping the other, nothing more nothing less and definitely not a business.
- doki_pen 17y ago
  It's bullshit. Invariably lending money to a friend leads to resentment. You are putting a dollar amount on the friendship. If they don't pay you back, will you still be friends? if yes, then why not just give them the money?
  - yalurker 17y ago
    False dichotomy. You don't have to say "we're not friends if you don't pay me back" but you can still want to be repaid. Who here hasn't loaned a friend a small sum of money? My friends and I are constantly in debts of 20 or 30 dollars to each other. I've had a friend/roommate owe me a month's rent without any problem. At no point were we every "putting a dollar amount on the friendship". It's often a bad idea to mix friends and business/money. That doesn't mean it is always a bad idea.
  - vijayr 17y ago
    Its just like borrowing your friend's car. You use it for a weekend, and return it back, don't you? Does your friend take "deposit money" from you for it? Does he charge you "rent" for using his car? No. That is the difference between your friend and a rental car company. You are putting a dollar amount on the friendship Nope, I am not. All I am saying is, if I am in a better position than my friend, and he needs help, I am willing to help. He has to borrow money from someone anyway, why not from me, interest free and trouble free? He can sleep peacefully at night, knowing that I wont foreclose his house or something, if he is going to be late in repaying, or even if he is not able to repay at all. If they don't pay you back, will you still be friends? Yes. We are talking of FU money here, and also assuming that I am in a situation like Mint founders. I am in a position to loan money, without affecting my own lifestyle. Obviously, if I am myself living paycheck to paycheck, this won't apply. why not just give them the money? because, I don't want to patronize them, and don't want to insult them. Frankly, I don't understand why you call this bullshit. Loaning money to friends happens all the time. I've done it many times, and have always been repaid.

vl 17y ago

Ironically, giving interest-free loan can produce complicated tax implications. It seems that loaner potentially may be taxed on the difference between 'reasonable marker interest rate' and (in this case) 0%. Receiver may potentially become liable for gift taxes.