Service of Ducking a Request for a Loan

May 16th, 2024

Categories: Lending Money, No, Saving Money

I’ve written here about the pitfalls of lending money since 2010. In “The do’s and don’ts of lending money,” on NPR, I was most interested to focus on the part of Andrew Limbong’s article where he addressed how to say “no.”

He also mentioned the usual—best to give the money as a gift as, in the first place, you shouldn’t lend money that you can’t afford to lose.

The pundits he spoke with warned not to co-sign a loan either.

I loved the anecdote he shared about Michelle Singletary who had asked her grandmother to co-sign a car loan. Singletary, a personal finance columnist for The Washington Post, was a fledgling journalist at the time. Grandmother said: “Let me get this straight. So the bank, which has way more money than I do, turned you down? Now you want to put my finances on the line?” Singletary said she took the bus and saved “until I could save up enough to get the loan.”

She added that if you co-sign, “it also means that the debt is on your credit profile. That could prevent you from getting a loan or make the loan you need more expensive.”

What if you can’t afford to give money to the person asking for a loan? Limbong wrote: Offer other ways to help, say our experts…. If someone is coming to you for money, it probably wasn’t their first option. They’re probably in a bad situation and don’t see any other way out. They’re vulnerable. And your turning them down is going to hurt.”

Instead of giving money one expert helped the family member draft spreadsheets and created an action plan for repaying debt. Other ideas ranged from pitching in with childcare so the person can work more shifts to “offering to bring them dinner.”

I’m not sure about the dinner idea. I’ve just asked you for $5,000 and you offer to bring me a meal? Hmmmm.

If the cause is serious a better idea might be to help establish and promote a plea on a crowdfunding platform such as GoFundMe.

There are countless examples of friendships broken once the dynamic between two people changes to lender and borrower. But refusing money ends up in the same place. I’ve had to turn people down because I couldn’t give them anywhere near the amount of money they wanted and further, I knew that this would not solve their problem and it would be only the first of many future requests as they showed no plan to address the cause of the financial leak.

What words would you choose to turn down a request for a loan? Are there people to whom you would lend money in a second?

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14 Responses to “Service of Ducking a Request for a Loan”

  1. Linda Levi Said:

    Linda on Facebook: Lending money, especially to family members, can be tricky indeed. I’ve lent to one sibling and no issues arose. Lent to another and it was a years’ long nightmare. Moral: beware and know your customer!

  2. Jeanne Byington Said:

    Linda,

    It has been years since I lent money, and I am not proud to admit that I never saw a cent of it. I finally gave up asking for it back. I refused to give to the last person who asked at a time I could not afford to gift which, based on the person’s history, would have been what the money would have been and the requests would have continued for years. It’s tricky as you so aptly put it.

  3. Linda Levi Said:

    Linda on Facebook: Thankfully my loan was repaid after several years, but I learned my lesson.

  4. Stephanie Schley Said:

    Stephanie on Facebook: Mostly give but would only loan to a person that under the right circumstances I would be willing to give to !

  5. Jeanne Byington Said:

    Stephanie,

    Sound strategy!

  6. Lucrezia Said:

    My loan policy is simple. If dire straits are involved, it’s not a loan. Otherwise, it’s a polite refusal. I like the grandma’s direct response in the post and may use it should an unwelcome request be made in the future. It’s a genuine one size fits all approach!

  7. Amanda Ripanykhazova Said:

    WOW! What a stone cold grandmother!

    I’ll bet that hidden behind the pretence of relevance in the suggestion that the bank has more money than she does, is the point that she is a multi-millionairess all of whose money is sitting in the bank earning her a full 1% in interest.

    I wonder who needs it more, the grandmother, the bank or the grand-daughter?

  8. Hussein Ahman Uttah Said:

    Yeah! The grand-daughter should have offered her 1.2% on her money. That was her mistake.

    Except that the grandmother doesn’t exactly sound the negotiating type.

    I’ll bet this little parable took place in rural Wyoming where a car is an absolute necessity!

  9. Jeanne Byington Said:

    Amanda,

    I agree with Granny! One of the smartest things my mother ever said to me was “what a great idea! And you will pay for it.” She said it as I was winding the final bend of my college career. Knowing nothing else, when she asked me “what are your plans?” I replied, “going to graduate school, I guess.”

    It’s not as though I’d been dreaming of entering a particular industry or becoming a lawyer or podiatrist. I had no idea what I wanted to do or what I was good at. After 12 years of private school and 4 of college all I knew was school and that somebody paid for it. My mom was right at opening my eyes and so was that grandma.

  10. Jeanne Byington Said:

    Hussein,

    The granddaughter said she continued to take the bus to work so wherever she was, there was public transportation. I bet she appreciated her first and subsequent cars more than most once she was able to make her own arrangements.

  11. Lucrezia Said:

    Grandma was anything but “stone cold” as suggested in a previous post. She was teaching the grand baby a valuable lesson: Family members are not to be treated as banks. The example of family members should instill independence and pride of accomplishment in the young rather than encourage them to be parasites.

  12. Jeanne Byington Said:

    Lucrezia.

    I agree.

    We don’t know Granny or her circumstances but I bet if she had the money she would have jumped in to help if her granddaughter was sick and needed money for meds or care.

    I remember my Red Cross swimming badge advice that Granny may have followed. Rule number one: if you think you can’t save someone don’t try as you don’t want two people to die. If Grandma was putting herself in financial difficulty by co-signing she wouldn’t help the family by both granddaughter and grandma going belly up should the church young woman lose her job. Every week two newspapers close up (I think npr mentioned this on its fundraiser this week) and grandma may be aware of the precarious nature of her granddaughter’s vocation.

  13. Jim Gordon Said:

    Jim on Facebook: When I was in college I was driving with a girlfriend from New Hope back to college and we stopped at an antique(?) store. I saw a bugle and asked the price, but didn’t have the $10 cash. The owner said take it and send me a check. He said he’d sooner trust someone he didn’t know than a relative. He got the check a few days later and I still Have the bugle..toot toot.

  14. Jeanne Byington Said:

    Jim,

    Great memory.

    I was registered at Tiffany and visited the office before I left New York to follow my new husband to Illinois as an Air Force wife. I told the manager that they wouldn’t be getting more business from us and she encouraged me to continue to order. “We know you’ll pay your bill far sooner than the residents of Park and Fifth Avenues,” she said.

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