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Above all, if youre unsure about their ability to repay, thats a red flag you shouldnt ignore.
A common mistake he said people make is loaning money without setting clear terms.
Below are the key signs youre making a mistake lending money to friends or family, according to experts.
Shahnazari agreed that a significant indicator is the borrowers history with money management.
Past actions often predict future behavior.
Furthermore, Ray advised to consider whether theyve asked others for help before.
Before lending, Ray said its important to ask yourselfsome hard questions.
Can you afford to lose this money?
If the answer is no, it might be better to say no upfront, he said.
Overall, treating personal loans like business transactions can protect both relationships and finances.
Put everything in writing as this avoids confusion and sets expectations for repayment.
Lending money can straineven the strongest relationships.
Before agreeing to lend money, Shahnazari said its essential to evaluate these signs carefully.
Doing so can protect your finances and your relationships, he said.
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