Saying “no” to a friend or relative borrowing something, especially money, is one of the toughest dilemmas we encounter in our lifetime (I might have overreacted there, but you get me, it’s tough to say “no” to a friend or relative). You are anxious not to hurt somebody, or make the refusal sound personal and potentially create a bad impression on your friend or relative. It’s awkward, it is difficult and whenever you say no, you’ll inevitably feel guilty.
But don’t be. There are ways to refuse lending money to family and friends without making it sound personal… that you do not care and don’t want to help, and then feel awkward.
DON’T FEEL PRESSURED
Many people agree to these type of loan requests because they do not feel they can say no. You might feel a little backed into a corner with no way out, if your friend or relative is pushing you to make a decision quickly. Hey, chill. You do not have to decide right away. Think before you decide. Do not let the pressure get to you. You have to consider your own finances, too. You might get yourself into trouble if you unwisely grant that personal loan and forget you need the money yourself.
RESPOND TO THE REQUEST WITHIN 24 HOURS
If you really need time to think about the request, tell your friend or relative that you have to sleep on it first. Think about it thoroughly. The additional 24 hours will also give you time to form an articulate response. But do not make them wait for too long, in deference to your loved one’s problem, and to ensure that you do not build false hopes.
BE FIRM AND CONCISE
Firmly explain that you are not able to provide him or her with a loan. Make it short, straightforward that it does not give your friend or relative much room for argument.
DON’T MAKE PROMISES YOU CAN’T KEEP
Once you’ve made your mind that you won’t lend money to your friend or relative, don’t beat around the bush. Say so! Make it clear that you won’t be able to lend the money. If you hint that a loan might be possible “someday”, you’re really just setting up that person to repeat the same awkward conversation with you in the future.
DON’T MAKE EXCEPTIONS
Okay, if you truly do not want to loan money to your friends or relatives, you must not make exceptions. Imagine refusing a loan request by one of your friends, and then another one comes and then grants his or her request … that could cause potential conflict within the family or your circle of friends. Stand firm.
Also, it is a little bit more difficult if your friend or relative knows that you do have extra money to spare! Well, just say you need an emergency fund, or you are planning on investing on something in preparation for something valuable in the future (e.g. studies).
Now, after telling your friend or relative that you cannot grant the loan he or she is requesting, do not just leave your friend or relative in a hopeless situation. Instead, help him or her to explore some other alternatives.
Here are a few helpful ways you can explore:
- Help Review Their Finances
To help soften the blow, offer to help your friend or relative take a look at his or her finances. This way, it’s clear that you want to help. There may be a way for your friend or relative to avoid getting a loan, after all!
- Suggest Alternative Ways to Earn Income
Perhaps your friend is not that financially intelligent and needs to make more money to pay for unexpected expenses. Perhaps he or she has got poor financial habits which hinder him or her to succeed financially. You might want to teach him or her the idea of earning passive income on top of his or her active income source.
- Give a Gift
Does your friend or relative have a birthday approaching? Consider giving a cash gift this year. The gift will be appreciated, and you might feel a little better about refusing the loan.
Do not feel guilty. Your friend or your relative will also understand why you refused his or her request. It is important to refuse properly and make your friend or relative feel that you genuinely care about his or her situation. So, try to help your friend or relative in other ways if you cannot grant that personal loan.