How to Ask a Friend to Pay You Back

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Lending money can be a tricky situation, especially when you lend money to a friend. What if they don’t pay you back? How will you deal with the awkward conversation of talking to your friend about money? What if the situation blows up and ruins your friendship? These are all circumstances you want to avoid when you loan money to a friend.

If you do decide to lend a friend money, always be clear and upfront with your friend. Don’t shy away from the uncomfortable talk, avoiding it could end up costing you a friendship. Prepare yourself, stay informed, and avoid losing sight of the circumstances.

Check out these tips for the best way to handle a tough situation like asking a friend to pay you back.

Before the Loan

The Situation: Your friend needs money and asked you to lend them some. Since you are a good friend, you obviously consider this request very seriously.

You want things to go smoothly, so it is important to plan ahead. Make sure you have taken all of these precautions when you are considering lending your friend money.

  • Asses your Friend Financially

Although it may seem judgmental, you need to critically look at the financial status of your friend. However, you don’t need to broadcast your thoughts and opinions to your entire friend group.

Is your friend holding a job? Do they have a track record of financial recklessness? Having a pal who is willing to throw down half their paycheck on a night of drinking may be great when you want to have a fun time, but you may want to hold back on giving this person your own money.

A friendship is personal, loaning money is not. Be wise and protect your money, especially if you are thinking about lending it out.

  • Create a Payment Plan

Talk about repayment before you hand out any money. Be clear that the money in question is a loan, not a gift, so your friend knows they need to pay you back.

Depending on the amount of money you lend, establish a formal payment schedule on a weekly or monthly basis. That way your friend can pay you in smaller amounts, instead of having to worry about a lump sum.

This can be a convenient method for you too: it might be helpful to have some extra money coming with your weekly paycheck, or a little added help with your rent check each month.

  • Set a Deadline

If a formal payment schedule feels too much like dealing with a stuffy bank, try establishing a simple deadline. Before you lend out your money, set a date a few weeks or months in the future as the payback deadline.

That way your friend can pay you back however they feel comfortable: this may be by paying the whole amount at the end, or by paying in installments like an informal payment plan.

  • Put it in Writing

After you and your friend have talked about the basics; such as how much money are you lending, when your friend is getting the loan, and set a general deadline or repayment schedule, write it all down.

It can be a simple, informal bullet list of all of the details of your loan agreement. You should get it notarized or you can involve a lawyer to create a formal document based on your agreement.

Involving a lawyer doesn’t have to be intimidating. Be truthful, yet casual, with your friend by saying something like, “We’re new to this, so I am getting some help from my lawyer to make sure we do everything right.” You should most definitely feel free to get a lawyer involved if you want to.

  • Use an App

Avoid meeting up with your friend in a parking lot once a week to exchange an envelope of money, as this looks totally sketchy. Make repayment quick, convenient, and sketch-free by using an app.

Popular applications like PayPal or Google Wallet are not just safe ways to buy things online anymore, you can use them to send money to people you know. Also, with Google Wallet, you can receive money without even having the app. All you need is a Google account, along with a debit card or bank account in order to receive money that a friend has sent you through Google Wallet.

When you Need the Loan Repaid

The Situation: This is what you worried about. You lent your friend money and they haven’t paid you back. You even took the time to create a payment plan! Try not to get angry with your friend, communicate with them instead.

  • Meet in Person

Discuss the matter with your friend face-to-face. Talking in person is better because you will get a better insight into the situation by observing your friend’s body-language and facial expressions. Set aside a time when you and your friend can talk about things alone. Bringing it up when you are hanging out with a large group of friends is a horrible idea. Your life isn’t a reality television show, you don’t need the drama.

Avoid talking about the situation through text message or over the internet, this is not a time for lol’s and emojis to lighten the mood.

Keep it casual and meet up with them for a lunch or coffee, maybe let your friend pick the place if that makes them feel more comfortable.

  • Be Direct

Ask concrete questions and expect concrete answers. Make straightforward inquiries like, “Do you know when you will be able to pay me back?” “Can you follow the payment plan we made or should we make a new one?”

Don’t accept wishy-washy answers like, “Soon,” “I’ll have to see…” or the dreaded, “I don’t know.” If your friend is avoiding your questions, find out why. Maybe they need more time to pay you back. Perhaps they do not have the means to pay you back at all. Either way, you need to know.

  • Remind them Kindly

Even if you are feeling angry with your friend, rein it in. If you confront your friend with hostility, they may respond by acting overly defensive, which could lead to the friendship-ending fight.

Always replace hostility with kindness. Your friend could be going through something that completely changes the circumstances, or they could have just honestly forgotten about the loan.

This is where putting your agreement in writing comes in handy. You can reference the document and say, “Remember when I lent you X-dollars on X-day? Will you be able to repay me that money soon like we talked about?” You can be direct, clear, and sympathetic at the same time.

  • Tell them What You Need the Money for

Perhaps your friend needs a bit of a reality check. You have bills and payments too. When you talk to them, try mentioning why you need your money back. Say something like, “My electric bill is crazy this month, I could really use the money I lent you. Do you think you could get that back to me before my bill is due?”

While you do not need to justify why you need your own money to your friend, maybe hearing about your financial obligations will give your friend some perspective and encourage them to pay you back a bit quicker.

  • Avoid Letting the Loan go Unpaid

If you keep dodging the situation because it makes you feel awkward, it is only going to get more uncomfortable with time. Confront your friend about the issue sooner rather than later.

The more time that passes, the more room there is for misunderstandings. You friend might think that you let the loan slide because so much time has passed. While you shouldn’t remind your friend about their outstanding loan every time you see them, it is important to make sure they do not forget.

When the Loan Hasn’t Been Paid Back

The Situation: Well, this is awkward. You’ve met your friend in person, asked them kindly and directly to pay back your money that you need, and what do you get in return? Crickets, nothing, zilch, nada. Here’s what to do next:

  • Decide What Means More

At this point, you may need to make a decision. Is the money you lent your friend months ago worth ending your friendship over? If your friend borrowed money they cannot pay back, it may be time to accept your loss and vow to never lend that friend money again.

  • Accept “Different” Payment

Think about the money you spend on certain services, like Uber rides, babysitting, or house-watching when you are away from home. If your friend cannot pay you back financially, they might be able to pay you back a different way.

Next time you go out of town, ask your friend to stop by your house to water your plants, feed your cat, or give you a ride to and from the airport in lieu of paying their loan back. You will save on the money you would have spent paying for these services, and your friend will relieve themselves of their financial debt to you.

  • Take Legal Action

Unfortunately, if your friend doesn’t respond to any of your friendly attempts to figure out the situation, legal action may be your only option. The first step in taking legal action against someone who owes you money is to send them a notarized letter asking for repayment with a specified amount of time given to repay the loan. You should also send this letter by courier or in the mail with a signature tracking system, so you can know (and prove) that your friend received the letter.

If you have any written documentation from your loan agreement at hand, now is the time to use it. Include any documents in the letter that prove that your friend acknowledged the money they were receiving and agreed to pay back by a specific time, and that the deadline has now passed.

Taking legal action against a friend who owes you money should be the last resort. Regrettably this may be the only option available to you. Taking legal action against a friend might damage the friendship, but you will most likely get your money back this way. You can always rebuild the friendship later, if you want.

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1Loan approval is subject to meeting the lenders credit criteria, which may include providing acceptable property as collateral. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by consumer. Loan proceeds are intended primarily for personal, family and household purposes. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

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