We would all love to be able to help a friend or relative in a financial fix, but there's a lot to consider before handing over a check. You should give only money you don't need, because there's a good chance it will never be returned. But if you do decide to take that risk, here's what to ask yourself before lending a single penny:
Why me?
Is this person coming to you for a bailout because every credit card, financing company, and bank turned her down? If you're the last resort, be wary.

What for?
Are you helping out your daughter who's raising kids on her own and was recently blindsided by medical bills—or are you bankrolling your daughter who's having trouble making the payments on her BMW? Think twice before supporting an indulgence.

What if I never see this money again?
Don't you dare tap your own emergency savings to pay for someone else's crisis. If something happens to you and you haven't been repaid, then you'll be the one having to ask for help.

What terms am I being offered?
When someone asks for money but doesn't mention how she intends to repay you, that's a problem. If she respects you, her initial request should come with the proposal of signing a written document, called a promissory note, in which she outlines the agreement. She must commit to a schedule for when repayment begins, the interest rate, how often she'll make installments, and the penalty for lateness. (It's also a good idea to get the document notarized. If you wind up in a dispute, you would have an easier time proving the claim is valid.) Sound a bit businesslike? It should. You're loaning money, not a cup of sugar. To keep things as sweet as possible, put everything in writing.

Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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