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You know, as much as I would love to be of help to my friend in a time of financial need, I strongly believe that loaning money to your friend is far riskier than loaning to a total stranger , I have certainly given it some thought, and from experience it has been confirmed.
Now on an even and neutral ground, the idea of lending money to someone you hardly know sounds and smells like asking for trouble. In a way its not different from deciding to embark on a journey blindfolded and leaving safe travels and arrival at your destination to pure luck. I can think of a number of ways that could certainly go wrong.
You might probably be thinking that something is definitely wrong with me for thinking that, well don't get me wrong, certainly there a lot of reasons why lending to friend is advantageous, there is a kind of peace of mind that come with that, of course, until proven otherwise. Now imagine you lent some money to a close friend and of course you are at peace thinking that it a piece of cake as you and your money borrowing friend are practically like conjoined twin. Then all of a sudden you see the other other financial side of this friend, which is cold and ugly, loan repaymentwise.
And you wonder, what actually went wrong in the above situation, were you wrong to have borrowed your friend money, NO you are not but you see the problem is when you lend money to a friend there is this feeling of, I don't want to call it entitlement, but friend especially very close friend (who are almost like family) ,tend to take money lent to them for granted, and most times it subconscious. so the risk here is if they eventually dont return it depending on how bad, it would certainly cause a dent in the trust built between friends over the years, that is if it doesn't completely ruins the friendship.
Now if you lend to a stranger there are more opportunities, an opportunity of having one more more friend who is grateful of the financial help bestowed by you on him of which you might eventually become close, and if he doesn't, that a loss at for him and you finally know him for who he really is or what he is. He lost you as a friend in the friendship department which was early enough before it went too far and of course you can easily take legal action as opposed to a close friend.