Should You Lend Money to Your In-Laws?

Posted May 21, 2009 by Bernz

Money is a sensitive issue even among family and friends. Money has ruined relationships between spouses, siblings, parents and children, and between friends. But money issues between in-laws are particularly sensitive. If this is the case for you, what can you do? Should you let your in-laws borrow money from you during difficult times? And if you decide to lend them money, can you expect it back? There are a lot of issues to consider before letting anyone borrow from you.

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Even the most credit-worthy individuals can become unreliable when they borrow from family members. They might reason out that the money is between families anyway. Even with the best intentions, it is almost impossible to treat the transaction in a business-like manner when dealing with the in-laws. However, before you think that lending money to in-laws is a terrible idea, there are some points you can keep in mind. This will enable you to get repayment in an easy, efficient, and friendly manner.

Before lending out any money to your in-laws, write a brief note that outlines the terms for their repayment. Include the schedule and the interest payment if you are charging them certain interest rates. It is possible that your in-laws might take offense because of this strategy. When that happens, simply mention that you need it for “tax reasons”. The emotional upheaval you’ll prevent is worth every ounce of the awkwardness during this conversation.

But there are cases when lending to in-laws is simply not a good idea. In today’s economic downturn, a lot of people are discovering that they have no sufficient funds to cover their monthly expenses after they got laid-off or had no sales. For example, certain individuals can no longer make their mortgage payments and are at the verge of foreclosure. In these instances, their quick fix is to look for a loan from friends and family.

If you find yourself in a situation where in-laws are asking money for you to cover their debts, realize that you might be throwing away good money over bad. Your in-laws might not know how to settle their debts, save, and handle money. Bailing them out might help them for the time-being but it will not solve their problem. Soon, you might find yourself in the same situation again. In order to prevent this, it is critical to talk to them about finding help. Try to convince them that attending financial classes will help. Once they recognize the problem before their situation takes a turn for the worse again.


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