Is lending money to relatives or children bad? Not at all. Simply helping someone in financial need is not a bad ideal. The problem occurs when that money is not returned in the established period or worse, the debt is never paid.
This is where the consequences come. Some so devastating that they cause damage to the family relationship. So what can I do when they borrow money from me? Although, it is your decision whether to provide financial aid, or not.
There are always factors that you should take into account before lending money to family members or children. Are you interested in the topic? Keep reading!
What should I consider before lending money to relatives?
Before making the decision to loan money to a child or a close relative, you should consider the following implications:
1. You should consider the risk before lending money to relatives
When you lend money, you do it thinking that in a short time it will return to you. However, it does not always happen this way. And even more so when you do it without signing any type of legal contract.
For this reason, lending money to family members is always a risk that you should consider before making the decision.
2. You must know what you need the money for
In this way, it will be much easier for you to define if your relative will use the money for a good, or if he will simply waste it. Remember that you should always take care of your finances and in the event that you decide to make the loan, the best thing is that you are sure that you will not need the money soon.
3. You must declare the loan
Although a loan is an amount of money that you hope that at some point it will return to you. For the Treasury, not everything is so simple. Let's put a practical example to understand how the Treasury can receive loans between people.
The first thing you should consider is that for the Treasury, whether or not they have a family tie does not imply anything. Suppose that you are going to lend money to a child, what is usually done is to grant a certain amount of money hoping that after a while it can be returned in full.
But this is a mistake, because the Treasury can classify it as a hidden donation and you could be in trouble. Although, the ease of lending money to relatives is the comfort of the payment terms and that a low interest rate can be granted or even not have one. Everything must be declared before the Treasury.
What does this mean? It means you must do it legally. For this you must create a contract between individuals . In general, the contract should contain the following:
- Exact date and place.
- Lender and borrower data: Their full names, ID, marital status, their addresses and make it clear who is who within the contract.
- Purpose of the loan: You must specify the use that will be given to the money you are lending, that is why it is very important to have prior knowledge of this.
- Amount and form of payment: It is preferable that it be done through transfers to have proof.
- Term: The term of repayment of the loan.
- Interest: Interest rates if applicable.
- Clauses: If you want to impose some for non-compliance with payments.
Now, based on the above factors, you may have already decided whether or not it is convenient to lend money to a relative. And in case you want to do it, what is the legal way to perform this procedure.
However, also take into account that you can recommend that your child or family member request a free online loan . Today, there are many companies that are dedicated to offering financing. The best thing about these options is that they are 100% legal, and they provide answers in minutes, without the need to send difficult paperwork.