My friend/family member asked me for a loan, but they don’t have the greatest history with money. What can I do to ensure I get my money back?
When lending money to a person who is close to you, treat the process just as if you were lending to a stranger. This helps things from getting emotional, and protects you from being taken advantage of. Since you do not have the luxury of directly withdrawing money from the person’s bank account, you have to depend on them to pay you. If you are not sure whether they can do that, reconsider giving them the loan. Or you can help protect your position by setting up a contract with the person stating all the details of the lending agreement, including a repayment schedule and any interest rates, and have each party understand it, agree to it, and sign it. The process of repayment can be flexible, making a payment every week, bi-monthly, monthly, etc.
Whatever it is, make sure it is realistic in order to avoid problems! Remember, you are the banker in this situation so be strong and do not let your friend or family member weasel out of anything! If both parties are responsible and respectful, the process will go off without a hitch and you will feel great for helping out a friend in need.