By Herb Weisbaum, The Consumerman
Lending money to a friend or family member may seem like a nice thing to do, but it often turns out badly, according to a survey by bankrate.com.
“We found that forty four percent of people who provided financial assistance experienced negative consequences,” said Ted Rossman, a Bankrate industry analyst. “The most common consequence was losing money.”
- 38% of those who provided financial assistance lost money
- 23% suffered a damaged relationship
- 14% percent harmed their credit score
Rossman strongly advises against co-signing a loan because of the potential financial and legal consequences if something goes wrong.
While you may feel obligated to help a family member or close friend, it’s OK to say no, Rossman told me.
“In fact, in many cases, you probably should say no because this often goes wrong,” he said. If you really want to help, don’t lend more than you can afford to lose and consider treating it as a gift rather than a loan, because I think a loan really hangs over both party’s heads.“
Herb Weisbaum, The ConsumerMan, is the consumer reporter at Northwest Newsradio, the founder of ConsumerMan.com, and host of the Consumerpedia podcast. You can follow him on Facebook and Twitter.
