5 Useful Ways to Politely Reject Someone Who Attempts to Borrow Money from You

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Have you ever felt being guilty just because you failed to lend money to your sister for her education? Or have you felt that regret for not lending money to your mother who has to pay for your garage door services in Tucson? There are times when our relatives and friends approach us for a small loan to help them tide over their financial woes. As the Chinese saying goes and we have to be extremely cautious in how we reject them.

What would you do or say in order to ensure that your relationship remains intact? Read on to find out the 5 useful ways you can use to reject someone politely.

Ask him for a loan. If your relative or friend constantly borrows from others, tell him that you are about to ask him for a loan as well. It lets him know that you have none to spare and even better, he might understand the pressure of rejecting a loan request from a friend.

Oh! I’m really sorry, I wish I could help but I don’t lend money to friends. Make sure to emphasize that he is not being singled out because he is untrustworthy and it applies to all your friends; if you have to, explain how a past experience you had lending an amount of money to a friend led to a change in nature of your friendship with him.

I’m sorry, but I’m very tight financially as well. It could be true or it could be not, however this gives you legitimate grounds to firmly say “no”.

My wife controls my finances, and she doesn’t approve of me lending money out. While you might be a bit of a jerk for pushing all the blame to your spouse, sometimes you just have to take the control out of your hand and give it to someone else, especially when the borrower has no grounds to approach her for a loan.

Offer alternative ideas. A friend will only approach you for a loan (mostly) only if they felt that they have no other avenues to pursue. Just like you, they don’t want the friendship to sour because of money issues – unless they got into a friendship with you precisely because they wanted to mooch off you – and it usually takes a lot of courage and pressure before they even think of approaching you. Be a supportive friend and suggest ideas and alternative ways they can pursue to get the amount of money they need, such as getting a part-time job or selling their old stuffs in a garage sale.

The article is especially important as most of us loaned money to friends and family because we felt that there was no other choice. No matter which method you use, do keep in mind that they (most probably) have abandoned their pride and dignity doing the asking and we should try to help them maintain a sense of dignity and give reassurances that nothing will change even after this incident.

The 3 Golden Rules of Lending to Friends and Family

Conventional wisdom holds that you should never lend more than you can afford to lose. Believe it.

If your brother or your BFF asks for $500 for car repairs, you have no guarantee you’ll ever see those funds again.

Here are the three “golden rules” of lending money to friends and family. Follow them, and you should stay out of financial entanglements that strain relationships.

Rule No. 1: Make a policy of saying ‘no’

Have trouble saying “no”? Try it a different way:

“That’s not in my budget. Sorry.”

“I have a strict anti-lending rule: I’ve lost too many relationships this way.”

“I paid for your last car repair, and you haven’t returned the money. I can’t do it again. Sorry.”

“Let me look at my budget and see what’s possible. I’ll let you know by the end of the day tomorrow.” (This is for when you’re blindsided and/or it’s a very emotional situation. Go home and send a “that’s not in my budget, sorry” email.)

If the would-be borrower continues to plead with or badger you, remember that you cannot wreck your finances to prop up someone else. It’s really OK to reply, “I’m not in a position to help you, and I won’t discuss it further. Sorry.” Be prepared to hang up the phone or walk out of the room.

Should the person bring it up again the next time you meet, firmly state that “if you keep talking about borrowing money, this conversation will be over.”

The most important thing is to formulate a policy now, so you won’t have to think on your feet when the situation arises. Maybe you only lend in dire emergencies, or to relatives with jobs. Or perhaps you decide not to lend to anyone under any circumstances.

The important thing is to decide on a policy, memorize it, practice saying it and stick to it — no exceptions. Your response should be immediate and firm.

Rule No. 2: Try to help in other ways

Financial guru Dave Ramsey doesn’t think you should ever lend money, especially to family members. “It ruins relationships,” he says. “If you have the money to help then give it, don’t loan it.”

Don’t make a habit of it, though. If your cousin or your frat buddy needs help on a regular basis, those cash infusions address the symptom rather than the disease. Whether it’s careless spending or a lifestyle that’s too big for its britches, the underlying issue needs to be fixed, not enabled.

Rule No. 3: If you must lend, be smart

If you do decide to lend, get it in writing — even if it’s your mom, or the parents of your godchild.

You can get a free promissory note form online from a variety of sources including rocketlawyer.com, to name just one. Gail Cunningham of the National Foundation for Credit Counseling suggests getting the documents witnessed and notarized. This shows the borrower that you’re serious about being repaid. It also protects you later on if things get ugly — for example, if that former BFF stands in front of a judge and says, “It’s not my signature.”

Be specific about repayment terms. “As soon as possible” is vague enough to be interpreted as “any time from next week to never.” Spell out what happens if you are to die before the loan is repaid: Will it be forgiven, owed to the estate or — if the borrower is a close relative — subtracted from that person’s share of any inheritance?

You might also consider putting this phrase into the document: “If you don’t repay me via the terms on which we agreed, you will never again be allowed to ask me for money.”

If this is a significant amount of money (versus spotting a pal $50 until payday) protect yourself by talking to a lawyer and, possibly, requiring something to secure the loan.

Again, you shouldn’t lend money you aren’t willing to lose. Promissory paperwork notwithstanding, are you really prepared to take a sibling or a friend to court?