1) Be gentle and ask politely
This is a no-brainer, but is still the first line of offense you have when touching on the topic. It doesn’t hurt to be courteous when you start asking politely for the money they owe you. Remember, don’t get confrontational, there’s a possibility they’ve been too busy and truly forgot they owe you.
Other things to remember when asking for the first time:
- Ask in private and add a little humour if possible, to avoid those awkward moments.
- Keep a cool head even if you happen to be annoyed at the prolonged period they took to repay you.
- Be firm and ask them directly if they still remember the amount owed and when they’re able to pay it back. Beating about the bush will not get you anywhere, and might even complicate the situation.
2) Enquire for updates
Another way to tackle this situation is to ask them for updates on what they’ve been using the borrowed money for. Then, use those updates as prompts to subtly steer the conversation into letting them know it’s high-time they coughed up and paid you back your hard-earned money.
If that fails, try dropping some friendly reminders or not-so-subtle hints, but make sure to always do so in person. Avoid doing it via text, email or call so as to avoid any misunderstandings (you know how technology can be).
3) Let them think you need help
If the first two methods have failed thus far, why not try your hand at twisting the truth a little? We wouldn’t advocate flat out lying though.
Tell them your finances are tight at the moment and you urgently need the cash for an emergency (choose whichever suits you more): tuition fees, rental, car troubles, or medical payments. Your circumstances should be simple and direct, there’s no need to add any more confusion to your life than is necessary.
4) Make Terms Flexible
It’s very likely that the person you’ve helped out financially could have honestly needed the cash for a critical reason. For the sake of this person in need, consider offering a more flexible repayment term. Try asking them to pay you back via installments (if the amount is large enough for that sort of arrangement).
By breaking the payment down into bite-sized chunks and offering more time when they’re not in the best of shape financially, it shows that you care about the relationship as well. It also serves as a clear reminder that they shouldn’t take your generosity and kindness for granted.
5) Let them get the next round
You can, in addition to the previous tips, be a little manipulative and request for the borrower to pay for all your expenses when you next meet them. Some examples of these would be meals, movies, concerts or coffee to make up for the amount owed. This is only recommended for an amount that you can afford for it to be traded in such a way.
This is one of the more common ways to settle a smaller debt while still ensuring that the both of you have a good time together. Don’t start being a miserly scrooge though, and count each bill down to the last cent they owe you.
6) Exchange for work
For larger amounts which can’t be paid off with a few cups of coffee, you might want to consider making your friend or relative work for the amount owed. This method is only to be used if you don’t mind not getting your dues back in cold hard cash.
Almost everyone has a talent or skill that can be put to good use, so if you ever require some form of assistance that they can provide in lieu of paying you cash, why not utilise that method? For example, if you need help setting up a website, baby-sitting duties, cleaning and housekeeping, or becoming your chauffeur-for-a-day. Talk about efficiency!
What if they don’t pay you back?
This would probably be the worst case scenario, depending on how big the amount is. Our piece of advice – move on. Take it as a (pricey) lesson, and that you’ve identified who the genuine ones are in your life. Not only will you be rid of a toxic relationship, you’d know what to do in the future (steer clear of lending money).
You could opt to haul the borrower to court, should he/she disappear, in an attempt to reclaim the cash. Bear in mind that there’s a chance your case will be rejected, especially if you don’t have any solid evidence. You’d end up unhappy and having to fork out more in legal fees.
A (pricey) lesson learned
In order to keep your relationships on good terms, here are the lessons learned:
- Say “No” the next time someone who has a bad credit history with you decides to ask you for some money.
- Always have a written agreement of the expected return date, and make it clear that you are serious about it.
- Only lend an amount that you can afford to spare (or lose).
- Use apps such as BillPin to split bills, tabs and rent among friends, and record any outstanding balances.
- Make sure to differentiate between a genuine friend and an opportunistic vulture who simply wants to exploit you for financial benefits.
- Better yet, never lend money to anyone unless the person is able to provide proof that he/she is in dire need of the cash.
Last but not least, here’s our best tip yet – if someone asks a loan from you for the purpose of purchasing a car or a house, introduce them to alternative options. One such example is Loanstreet’s platform, which not only offers the best interest rates for personal loans, home loans and ASB loans, it’s also able to spare you the hassle of trying to chase someone for your money back! We know money is important, but it’s not important enough to cost you a relationship.