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How to get money back from a friend

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Ever have trouble getting money back from a friend?Ever loaned money to a friend? If so, then you’ve probably experienced some level of awkwardness, which usually kicks in when it comes to asking for your money back.

Last year, researchers at Carnegie Mellon University found that friends who borrow money remember the loan very differently than friends who lend the money. Sometimes, borrowers even remember the amount differently. Researchers call it “the blind spot.”

George Loewenstein, Herbert A. Simon professor of economics and psychology at Carnegie Mellon and the study’s co-author, explained the concept to me.

“The blind spot is borrowers’ failure to realize how much lenders are bothered by unpaid loans,” Loewenstein says. “Borrowers believe they will eventually pay off delinquent loans and don’t realize that lenders get very pessimistic and very angry and upset once the anticipated date of repayment passes.”

Basically, people remember the loans they give but not the ones they get. So how can you power through the awkwardness and get money back from a friend?

1. A gentle reminder

A reminder — I could really use the money I loaned you right now — may be all it takes for your friend to see the light. It doesn’t matter why you need your money; it’s your money. Maybe you could “really use the money” for a cruise; it doesn’t matter. It’s more a reminder than a plea. If nothing else, this is a great way to open the conversation about repayment.

2. Directness

Your friend may not get the hint. I once loaned money to a friend, and gentle reminders were scoffed at. “You earn way more than me,” my friend would say. “Why are you so worried about money?”

Blind spot! In my case, nothing worked like directness.

Remind your friend you didn’t mind loaning the money, but you’re concerned that it’s still unpaid. Ask them, point blank, when they’ll be able to pay you back.

3. Deadline

Your friend may just need a deadline. Give them a specific date that you need your money. If the deadline comes and goes, ask them if they would prefer to pay in increments.

4. Loan terms

“Borrowers and lenders should write down the agreed upon terms of the loan, so there are no misunderstandings, and no scope for selective remembering,” Loewenstein says.

Developing a repayment plan is a great way to separate your friendship from the money. It also helps your friend realize it’s a loan, not just a favor. Favors are often easier to forget than something tangible, like money.

5. Forgive and forget

Your wallet won’t like this option, but if you don’t see your money coming back and you want to salvage the friendship, moving on may be best.

“Ideally, lenders should only lend money if they are prepared to write off the loan, and if they think they can do so without too much damage to the relationship — without developing too much resentment toward the borrower,” says Loewenstein.

If you go this route, just make sure to set boundaries in the future.

What do you think? Have you ever had to get money back from a friend and have it turn ugly?

(Photo: Flickr user Quazifoto)

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21 Responses to “How to get money back from a friend”

  1. Cindy says:

    What I learned, the hard and painful way, was that if I “lend” money to a friend, I should never expect it back. In other words, think of it as a gift even if you say it’s a loan. That way you won’t become resentful and angry if it’s not paid back, but you might be pleasantly surprised if it is paid back. And either way, the friendship stays intact.

  2. CrazyRcPilot says:

    I didn’t necessarily lend the money, a friend crashed my father’s Jet Ski that I was borrowing and it needed to be replaced. As a good son, I bought a similar quality replacement and then told my friend how much was owed.

    Long story short, out of the $3,600 I paid, all but $500 was paid back. It took over 3 years to get that much and it was like pulling teeth. Honestly, the friendship to me isn’t worth the $500, I’d rather have the money, but the amount of effort to get the money has been more taxing than the financial loss itself.

    If anyone is ever in a situation that a friend owes money, be very clear about it with whomever is involved because chances are that in the end, you’ll either have the friend or the money.

  3. Kristin Wong says:

    Great bits of follow up advice. I don’t think I’d loan again without being prepared to write off the money.

  4. jim says:

    A “friend” who refuses to pay back a loan made out of the kindness of your heart, is not a friend. They are only a worthless human being, not worthy of my friendship.

  5. Anonymous says:

    I agree! Never loan more than you can afford to lose. I just write it off if they don’t pay me back. I consider it the cost of finding out whether I can trust them to be responsible. It is a rather cheap method of discovery rather than trusting them with something HUGE in the future only to find out how irresponsible they are. At that point their might be HUGE consequences for that misplacement of trust.

  6. HAKI says:

    thank you very much! I will applicate this in practic .

  7. Kristin Wong says:

    Dang Jim! I can’t help but think that’s a little harsh. But then again, I know how you feel. I try to be forgiving, because one is probably not in a good financial place if they’ve agreed to accept money from a friend. But you’re right, not paying back isn’t very good friendship behavior.

  8. Tommy Z says:

    My favorite tactic is to add 20-33% on to the loan balance when you ask for it back.

    Say you lend a friend $50 and you want it back. The next time you see him, say “Hey, do you think you could pay me back that $65 I loaned you 3 months ago?”

    The friend replies – “Hey, it was only $50!!!”

    You – “That’s right, $50. Okay, when can I have the $50 back.”

    It seems like the friends remember the money the borrow better when you increase the amount of the debt.

    • CrazyRcPilot says:

      Interest is exactly what the Banks would charge if that person was to get it from them, so why not?! Excellent point Tommy. The “favor” you are doing for that friend is NOT charging them interest, when they cease to be a “friend” by not paying you back, then the “favor” should also end.

      My father does this on legit terms and considers it his retirement gig, he functions just like a bank as a “hard currency lender” complete with terms, interest and contracts. Obviously its more with business acquaintances rather than friends, but as Jim pointed out, “friends” seems to drop in quality when it comes to cash.

  9. Adam Kamerer says:

    I’ve taken the stance that I don’t give friends loans, only gifts. If they decide to pay me back, I’ll gladly take it, and I hope they’ll do something for me when I’m in need, but none of that is necessary.

  10. SR says:

    In the past two years my sister has borrowed lots of money (hundreds) from me and just never pays them back. She always says she will when she borrows them and then just never mentions it again. I feel bad asking her for them and I feel bad saying no… I mean, we’re not rich. Can she honestly just forget when she borrows hundreds?!

  11. Tom says:

    If they are your friend and you have the money either just give it to them or don’t do it at all! You will most likely harbor ill feelings when they are slow or non responsive to paying you back. If you expect them to do the same thing you would do, you will see way too clearly their value vs yours on the friendship. Now if they relax and just don’t even attempt to bring it up, pay you a little on a regular basis, and yes even stop calling you or seeing you again guess who was not your friend? Who was in it for what they could get, and they did.

  12. Krystal says:

    I don’t lend money anymore. If a person cannot be bothered to live within their means, it is on them. People (even so called friends) have no integrity anymore. A loan is called a loan for a reason.

  13. Preston says:

    I have been there. I’ve learned to be direct and nail down the detail in the beginning. I’ve also verbally put in that “I will handle it like a bank, but don’t make it awkward.” All while looking them square in the face.

  14. Guy In San Antonio says:

    The best thing to do is to never loan money to family or friend expecting them to ever pay you back, especially if they are struggling. Just consider it a gift, that you are blessed enough to be able to help others. You will sleep a lot better and Thanksgiving dinner will taste a lot better.

    In addition, I am a firm believer that God (others may say Karma) will pay you back even if the person doesn’t!

  15. Shirley says:

    I have made it a habit to lend only small amounts. If that person asks for another loan, I simply say not until the first one is paid back. That has always been enough to keep further requests away.

  16. dojo says:

    I was always able to get my money back, even if in 2 cases it kinda took more than 6 months to do so (was promised the money is paid back in 2 weeks). Now I don’t lend ANYONE money again. If they ask me for money, I don’t have it :D

  17. This was a very tough lesson for me to learn, loaning out money to a friend. I have done this a few times in my life and I am sorry to say that I never got any of the money back that I loaned out. So I decided never to loan money out to any of my friends because it just causes more problems then it solves.

  18. bloodbath says:

    I do not lend more than $50, the amount I am prepared to lose. And, I never lend more than once to the same person.


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