Best way to lend money

Most people don't think about formalities when lending money. If they're lucky, they get their money back. Unfortunately, the opposite often happens, and the borrower disappears without repaying the loan. Because of this, it's a good idea to depend on the law rather than luck.

How to manage loans

There is an unspoken rule in lending relationships — don’t lend more than you’re willing to lose.

In case the loan is larger we see only two options: lend money observing all formalities or don’t do it at all.

Let’s focus on the first option. It’s always a good idea to get the agreement down in writing even when it’s a friend or family member asking for a loan. You should be careful because they can easily misunderstand the whole point of it and take offense. If this happens, emphasize the fact that this is an ordinary formality rather than an issue of personal trust. Anyway, don’t neglect the documentation. A written record can clarify the terms and help document the loan, but it does not guarantee repayment.

There are specific ways each country regulate the lending relationship. So before you lend money be sure to examine which formalities are required in your country.

If you are borrowing money, it is also important to observe the formalities. The lender could declare that they have not been repaid and use the court to obtain the funds a second time.

Thus when it comes to lending or borrowing money always remember that there is a real chance that you can lose it or be forced to pay twice. That’s why it’s so important to be rational and put all agreements, conditions and other relative information on the paper.

Tracking debts in Moneon

Debts are part of Premium. Moneon can track money others owe you and money you owe. A bank loan belongs under “I owe”. A debt record can help you follow the outstanding amount, but it does not replace the loan agreement or the bank's payment schedule.