February 19, 2018

How to Lend Money to a Friend and Get it Back

We all lend money to friends and most of the time we get it back also. There are some cases where money given to friend is not returned properly and you may have gone though great efforts legally or by force to get it back. What are the things that you should take care before lending money to a friend and ensure to get money back from a friend legally. This post will provide you how to lend and recover money from a friend to avoid issues like someone borrowed money not returning, legal advice to get money back and sue your friend.

lend money to a friend

How do you make a decision on Lending Money To Your Friend?"

I remember an old joke.

Employee ask boss: How do you take a decision on money matter?

The boss replies, " I toss a coin, and when the coin is in the air, I know the decision which I need to take."

You ask your heart. If you are going through a struggle and want some money, will this person give you that.

Assess his savings, assets and his past history of giving money back to the lenders.

Steps to Lend Money to a Friend

Take a paper and pen. Plain paper is good enough. Stamp paper has no relevance, if you do not register it. Write a summary of the friendly loan, you, witness and your friend to sign it and your friend offers you post dated cheque or undated cheque. A bounced cheque is grounds for a police complaint, per the negotiable instruments act.

You can ask for a post dated cheque if the friend tell you that he will pay you back in a time frame. Otherwise get an undated cheque.


Subject: Friendly Loan

This agreement, for a short term is to document a friendly loan between ...Name.... (mobile number / PAN number XXXX) and (Friend's name), where, (Friend's Name) has approached .....name..... for a short term friendly loan, to meet some personal expenses, mainly related to [Refinancing an existing loan / Pay for Medical expenses / Clear an existing Mortgage].

The amount being lent, as a friendly loan, that bears no interest is {Numbers / Words}. Friend's name has provided security in the form of a cheque, drawn on {Bank's name}, bearing number XXXXXXX with a promise to honour it before {Date, Month and Year}.

This agreement is made in good faith on this day, witnessed by __________ (Mobile / Pan number)


The cheque, where the amount and the beneficiary (your name) should be clearly written in his / her handwriting, incorporate the cheque by reference, by mentioning it in the document.

Transfer the money to the person' account and do not pay cash. You can use NET Banking for that. You will get a receipt Number in NEFT.

Ensure that you maintain a trail. If it is not too indecent, get it witnessed (optional).

Make 2 copies and give him one. When the repayment is done, destroy the document and the cheque.

This way you can ensure that you are serious about the money given and your friend will also get the serious vibe from you. Please share for others who are confused on how to lend money to a friend in emergency cases.

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