If a relative asks for financial help, it can be hard to refuse. There are lots of things that can go wrong, and you don’t want to risk falling out with family over money.
There’s no point getting into difficulties because you want to help and can’t say no. This is especially important if you’re not sure whether you can either really afford to lend to them or couldn’t cope financially if the loan wasn’t repaid.
Make sure you talk about, and agree, what would happen if the borrower lost their job, for example, and couldn’t pay the money back, or you needed it back in a hurry.
It’s worth taking the time to work out your own budget before lending to anyone.
It’s hard to think about, but if the borrower died with the debt unpaid you’d need proof to claim from their estate. If there’s a lot of money involved, it’s important to get advice from a solicitor or an accountant to arrange a more formal agreement.