A profound and personal question isn’t it? Partly because whoever you choose to lend money should be your personal business, isn’t it? Unfortunately, in the real world, your blossoming personal finance depends mainly on understanding when to lend and when to hold back.
Who is an in-law?
Love was designed to be a feeling shared between two people, but there’s just more when love leads to marriage. Marriage brings together two people and two distinct families who initially may have had nothing to do with each other. An In-Law is simply a person immediately related to your spouse. There are Parents-In-Law (your spouse’s parents), Brothers-In-Law (your spouse’s brothers) and Sisters-In-Law (your spouse’s sister).
Lending refers to giving an item, material, money or anything to somebody, with the reasonable expectation to get it back after some time. Lending must particularly be exercised with due care and caution so as not to incur grave consequences. There is a need to consider a host of factors before deciding whether to lend money or not.
What you may want to consider before lending money
There are numerous factors that you should look out for before deciding whether or not to lend money.
- Do you have enough? We trust you would never want to lend money that you don’t have. It’s the greatest measure of caution to analyze your financial status critically before lending. Reflect on the possibility of needing to fall back on the money you would intend to lend. If you would have to fall back on it; you don’t lend.
- Is your borrower creditworthy? You would want to determine whether or not your borrower has the habit of paying back his debt on time. A little true personal conversation and digging into the past would be helpful here. In case of personal loans, you might want to consider how discipline, honest or trustworthy your borrower is.
- Does your borrower have the capacity to pay back? This is perhaps the most delicate of all the factors you should consider. Consider whether someone in his station of life would afford to repay that which he has borrowed. If he doesn’t appear to have the capacity, you should avoid lending.
- Can you obtain collateral? It is very likely that you would want something of value to fall back on in case your borrower cannot pay his debt due to unforeseen circumstances. Collateral could be a property or anything belonging to the borrower which is approximately equivalent in value to the money lent.
- Can you afford never getting your money back? The answer to this question is a huge determinant in whether you should lend to your in-laws. Only lend an amount you can do without because recovering a sticky debt from an inlaw can be very awkward and may strain the relationship with your spouse.
- Could you help in some other way? There are many ways of being of help to somebody in need. Always consider the possibility of exercising other options and how workable they would be to the person in need. There are certain circumstances in which people borrow money for unrealistic and impossible purposes. In this situation lending money is a step in the wrong direction, advice as to an alternative solution would do more good.
- Can you keep track of the money lent? You must be willing to do a reminder to your borrower that debt is due whenever it becomes due.
Should you lend money to your in-laws?
While lending money to nonpersonal sources would be more contractual and legal binding. Lending money to your in-laws or close relatives is in its very nature gratuitous and a step you would want to avoid. Even when your In-law appears to be very creditworthy, capable and worthy of consideration, lending money seems to be riskier. This is mostly because they could easily wave off their indebtedness with little or no repercussions.
Loan oft loses both itself and its friend.
– William Shakespeare
Here are a few reasons you might want to avoid risking your cordial relationship with an in-law on a platter of money lent.
- Non-contractual nature of the loan; A loan usually comes with a contract of loan which stipulates the terms, conditions, and circumstances governing the loan. Unfortunately, in the case of non-personal loans like ones given to in-laws, the reverse is the case. In other words, such loans do not have the backing of the law and the agreement between the parties is not legally binding. However, it is advisable that before lending money to your in-laws, regardless of the personal nature of your relationship with them, make sure that you are clear on the terms of the agreement. Endeavor to give them a time frame in which you would want your money back.
- They do not feel indebted; Unlike contracted loans which produce a burdensome effect on the borrower to repay in terms of the agreement. In-laws are prone to thinking that they could always beat about the matter and afford more consideration. They trade upon their relationship and proximity with you to avoid paying in due time.
- You may feel uneasy asking for your money; To say you ‘may’ feel uneasy is an understatement, a better stance is that you ‘would definitely’ feel uneasy. ‘Getting money back’ talks are not typical conversations you would want to have with your in-law. The very nature of your relationship is up close, understanding and personal. There are instances when raising the issue of getting your loan back, may come up as offensive if not handled properly. On this note you’re indirectly posited to request subtly and gently which may turn out unproductive, leaving you in regret as to why you gave the loan at first.
- Lending may severe family relationship; You may find yourself constantly uncomfortable around the in-law you lent money. Its mutual at times, so both the lender and the borrower tend to avoid each other due to discomfort. This results in severed family ties and unprecedented distancing from one another. At times your in-law may feel less sufficient for having to borrow and have a low self-image before you. This could have been avoided by simply refusing to lend upon request and helping out with alternative options that may meet his demands.
- The Oliver Twist Syndrome; A situation may arise where the particular in-law capitalizes on your kindness to come asking for more and more. This might awkwardly twist your relationship into what seems as parasitic. There is a saying ‘give a man fish, and you may have solved his immediate problem but teach him how to fish, and you have given him as many fishes as he’ll need all his life.’ Lending money to your in-laws creates room for more borrowing which is very inappropriate as there are alternative ways to assist than risking your money and family ties.
- It is highly unprofitable: You do not only get to lose interest you would have made from contractual loans, but you may also lose your cordial and jovial relationship with your in-law. One can rightly say that it is a situation of complete loss.
After reading through this, do you think lending money to your in-laws is a step in the right direction? It’s not cool for your financial peace of mind and relationship growth. You should try as much as possible to walk your in-laws through their problems without having to lend them money. This way, you would sustain your personal finances and happy relationship with your in-laws.