Payday Loans to Friends and Family: No Contract without a Contract!

by James Ford

Do not lend to friends or family without a contract


Nowadays, it is difficult and many times entails financial demands, which in some periods exceed our possibilities and exceed the reserves that we have managed to save. In such cases, borrowing money – sometimes lower, sometimes higher amounts – is the solution.

Statistics say that people most often borrow in the form of consumer loans or loans from non-bank institutions. In second place are loans from private providers and only in the end is lending money from family or acquaintances.

There is a bit of psychology behind it: in most cases, the “shame” of lack of funds outweighs the internal tension to ask for help from a friend, colleague, or brother. Therefore, people prefer to “quietly” try to raise money from other sources so that none of the loved ones knows the best.

It’s not, of course, the iron rule! It all depends on the individuality of the personality, there are people who, in an emergency, do not solve such things and basically without shyness and come straight to you with a request to borrow them.

Article content

  • 1 Don’t be afraid to say no!
  • 2 Even an oral agreement is valid but high risk!
  • 3 What is on paper is given
  • 4 Conclusion

Don’t be afraid to say no!


How you decide to do so is entirely up to you, but before you nod your head in agreement, think that it is your hard-to-save money that you may ultimately lose! Because, whether you are serious or not, any loan to a creditor is such a risk! If that were not the case, no bank would have asked the candidate to borrow a confirmation of income, would not have drafted it in credit registers and would not have asked for a loan guarantee.

rsz_fin_problemy This may not be the case for your colleague who came to you for help, but the practice also suggests that people who find themselves (and sometimes their own faults) in such a financial misery also resort to borrowing from friends or family that makes it virtually impossible for them to raise money not only from the bank but also from the non-bank! They know that since you are not a financial market entity with a lending license, you do not have the opportunity to view credit registers.

You will also probably not ask for a receipt, but you will ask your colleague what he really needs the money for. It will be the least for him to think of any relevant reason!

So beware, because if this is a scenario like this, the headless “yes” can cost you a lot of nerves, trouble, braids with the courts in the future, but in the worst case you will never see your money again!

TIP: Read our older article on the risks of lending from private individuals.

The basic principle, therefore, is: do not make a quick decision and leave time to think! If a friend tried to push you in any way, take it as if a red light with the words “something stinks here – hands off”! If he (most likely) didn’t borrow him at the bank, they know why and don’t do it either!

It is always wise to stick to the principle of not lending your money to anyone. Do not be afraid to refuse even a close friend of your family. It is your decision to which you are fully entitled and your brother or colleague cannot be angry with you. Believe that because of this, your relationships will not be mutilated. However, if there were problems with repayment later – even for objective reasons – it could end up with a very unpleasant lawsuit and hostility to the end of life!

TIP: If a friend or loved one has come to you to rent, direct him to the bank. If it becomes clear that he is afraid that they will not approve the credit there, his options are still not exhausted. He can borrow from one of the non-bank companies. It is true that some of them do not have the best reputation, but it does not need to be so fast on the nail.

If you apply for a loan through our online form , you may not have a reason to worry. Only our verified subjects will be called to whom we guarantee seriousness and correct access.

However, if it is a really close person or a family member, who you know very well about the overall situation and the way of life, you don’t have to say “no” at all times. But there is one important principle: never borrow a good word! Even if an oral agreement is acceptable for a loan between private individuals, it would be legal against the word in view of any possible later evidence.

The oral agreement is also valid but high risk!

The oral agreement is also valid but high risk!

This does not mean, however, that any loan concluded under an oral agreement is automatically unenforceable. You can also claim justice in this case, but you must have proof! And this can either be a witness or a bank statement, or email communication or sms messages in a mobile phone that relate to a loan.

Therefore, if you – despite all the risks – and declare that they are not small – have decided to borrow money without paper, at least follow these guidelines to save future tearing:

  • transfer the money to his bank account and include information in the description that will clearly identify the payment as your loan
  • if possible ALWAYS insist on a witness who, in the event of a lawsuit, will be able to confirm that you have agreed with the borrower on how to return the borrowed amount, but also the due date (otherwise the borrower may argue that you have not yet returned your money because you are they agreed on maturity later = and without a witness, in this case, it will only be a “rope tug”, that is, just a word against the word.

What’s on paper is given

The legal relationship from the loan agreement arises by agreement between the parties, but it is most certain that the agreement is in the form of a regular paper contract and is signed by the debtor and the creditor.

rsz_platba The way your loan agreement looks like is entirely up to you – its form is not legally prescribed. However, in order to have full legal certainty, remember to mark yourself as a creditor and known as a debtor, state the subject of the contract (which is the borrowing of the agreed amount of money in a specific amount), determine the exact manner and time of handing over the money to the debtor, the method of refunding the debtor and maturity of the loan.

You can also agree on interest, or agree that it is an interest-free loan. You can also arrange for the debtor (ie, the repayment of the debt) to arrange it either once or in installments. However, it must always be clearly stated in the contract! It is also advisable not to forget to determine the conditions in the case of non-compliance with the due date and the determination of default interest. If you are more interested, read this article on the loan agreement .

If you can not give advice yourself, look for a loan agreement pattern on the internet and adjust it to yourself. If you want to bet on 100% certainty, you can visit a lawyer who will prepare it professionally and individually for you.


Practical experience suggests that if you have already decided to borrow a familiar, worst form, an oral agreement, that is to say, a good word loan! When it comes to money, it’s always serious, so don’t be frivolous. You better treat everything with a properly prepared and signed loan agreement.

The best advice we can give you is: don’t borrow at all and without exception! People who ask you for financial assistance should refer to obtaining a loan from a non-bank company. If there is a high probability that they will not be able to return the money, the financial institutions will find out and refuse the loan.

You as a natural person have only a limited opportunity to verify what his discipline of payment and overall financial situation are.

Tell him about us and refer him to our online form , which if he fills in and fulfills the basic prerequisites for obtaining a loan, he can have money on his account the next day.

Creditworthiness criteria for non-bank companies are set lower than for banks, so they can even get money even if they have a credit listing.


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