Nothing says “good friend” like picking up the dinner tab, buying a thoughtful gift, or offering to spot someone in a pinch. Many of us are wired to be generous with the people we care about. But what happens when your bestie asks for a lot more than coffee money?
Picture this: your close friend is struggling to make rent and asks for $1,500, promising to pay you back next month. You’ve never been in this position before, but you’ve heard the horror stories — loans between friends can create tension and even end relationships. You also have no idea what her financial situation will be next month, which makes the decision even trickier.
Your hesitation is valid. A Bread Financial survey found that 1 in 5 people have lost a friend over money, and nearly 30% of borrowers never paid their friends back [1].
Her request puts you in a bind — one that could affect not just your finances, but your friendship. So how do you decide whether to say yes or no?
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The consequences of loaning cash to your friends
Adding the presence of money or a loan into a friendship, even a healthy one, can quickly erode the relationship, as the unpaid debt hangs over every hangout and interaction. If your friend ends up not paying you back, you could lose trust in them.
If you lend the money, you may find yourself scrutinizing every purchase your friend makes while you’re waiting to be repaid. Meanwhile, she might start avoiding you — not necessarily to dodge repayment requests, but to keep you from seeing her spend on other things. In some cases, the borrower may even use guilt or emotional pressure to sidestep paying you back altogether.
Even if a one-time loan feels affordable, it can set a precedent. If she knows you’ll cave under pressure, she may keep coming back for more. Worse, once word gets around, other friends could start asking for loans too, turning one act of generosity into a cycle that strains both your wallet and your relationships.
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What to consider before you say yes
You may really want to help your friend out, especially if she’s always been reliable and trustworthy, and maybe this is the first time she’s ever been in a jam this tight. But before you give her the cash, there are things you need to consider.
First of all, can you afford to part with $1,500 for a month? Are your own bills already covered for the month, and if not, are you willing to dip into your budget to help your friend?
Knowing there’s a chance you won’t get your money back, are you willing to lose that $1,500 altogether? If so, it might be more beneficial to the friendship to gift the money rather than agree to a loan.
Really consider your friend’s financial situation. Is this truly a one-time bump in the road, and will she be back on her feet next month and ready to repay the entire $1,500? While it’s good that she’s never asked you for money before, you also don’t know her history of following through on financial promises.
If you do decide to loan the money, make an agreement for repayment in writing that both parties sign. Consider adding payments with interest if they can’t repay it all back as a lump sum. While this feels transactional for a friendship, it offers you protection and could save your relationship in the long run.
How to tell your friend “no”
If you are uncomfortable or hesitant about lending your friend the money, it’s perfectly okay to tell her “no” or that you simply can’t afford it.
Apologize and address the tough spot she’s in and tell her you know it must be stressful. Clear boundaries are critical: If you’re not ready to make the loan, be explicit about that. Being vague or leaving wiggle room allows for manipulation and guilt traps.
If you can, offer other ways to help her out, such as researching rental assistance programs or brainstorming a side gig.
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[1]. Bread Financial. “From friends to foes: money ruins 1 in 5 friendships”
This article originally appeared on Moneywise.com under the title: My friend just asked to borrow $1,500 for rent — I want to help, but what if she can’t repay? Is the friendship doomed?
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