Should i loan my sister money

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Personal Finance Loan Basics. Table of Contents Expand. When These Loans Make Sense. Key Takeaways Lending money to friends and family can lead to financial problems for you and potentially cause relationship damage.

Creating boundaries for loans to friends and family can help preserve relationships and minimize the potential for problems.

Cosigning a loan for friends and family in lieu of lending them money directly can also be problematic. Before lending money to friends and family, consider how it could affect you financially and emotionally. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. You might think helping your broke friend is the right thing to do, but doing so could totally ruin your relationship.

If you need some convincing, here are six reasons why lending money to friends or family is a bad idea. Most loans to friends and family have a very low or nonexistent interest rate. Nearly three quarters of people who borrow money from friends or family never pay the loan back in full.

Rather than expecting to get paid back, you should view the loan as a gift in your mind. The majority of loans consist of parents lending money to their adult children.

Sometimes the reason for the loan is a good one, like a one-time emergency that was completely unexpected. Unexpected emergencies and job losses happen. Draining your savings to help out a friend could leave you in the same position as them in the near future.