Recently two members of my extended family have learned a valuable, if somewhat painful, lesson: loaning money to purported friends can end up being an enormous, friendship-wrecking hassle. Fortunately, the memory of the difficult experience no doubt will discourage future forays into the personal banking business.
William Shakespeare aptly captured the concept in Hamlet, when wise old Polonius says:
Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
As Polonius recognized, the reality is that, when you loan money to an acquaintance, the relationship inevitably changes. You go from mutual friends to a debtor and a creditor. And frequently the resulting interpersonal behavior mirrors the change. Although the borrower has been helped by the lender’s generosity, the borrower often comes to resent the lender. It’s as if the borrower rationalizes that the lender must have plenty of money or he wouldn’t have made the loan in the first place. From there, it’s a short, easy step to concluding that the lender really doesn’t need the loan to be repaid — at least not right away — and therefore the lender is being a jerk in asking about when the money will be repaid.
In many instances, too, the borrower concludes that other things take priority over discharging the debt. I’ve heard friends bemoan the fact that their personal borrower has taken high-end vacations, eaten at fancy restaurants, and even purchased expensive cars while the loan is still outstanding. And, as often as not, the lender’s innocent inquiry about when repayment might be forthcoming draws an angry response — and an even more extended period of stalling and dodging any personal interaction that will inevitably involve the repayment question being asked.
And, ultimately, if the borrower doesn’t repay the loan, what do you do? Sue them? How often do the parties to these loan arrangements memorialize the loan in any kind of writing? I’ve had friends seek my legal advice about what to do in these circumstances — and I’m sure that when they made the loan in the first place they never suspected that they might need to talk to a lawyer, even informally, about it.
No, Shakespeare had it right: neither a borrower nor a lender be. Save yourself from future headaches, and don’t worry about being deemed a cheapskate by the pal who is in tough financial straits. If your friendship is contingent upon cash, it’s probably not much of a friendship in the first place.