Episode 1: Putting Money Lending in Perspective
Lending means to grant to someone the temporary use of something on the understanding or condition that it, or the equivalent, will be returned.
If a bank or any financial institution lends money, it lets the person have it on condition that they pay it back later, often gradually, with additional amount as interest.
When something is being given out without the condition of returning it to the giver, then we can call that a GIFT. A gift comes voluntarily as an act of fact and has no strings attached.
The opposite of lending is borrowing. When something is being lent, there are parties involved, namely, the lender and the borrower.
Any material or possession of value can be lent ranging from books, bicycles, stationary, bags to money. But for the context of our discussion, we are going to focus on money.
Lent money is a loan for the lender and a debt for the borrower.
Many people ask: Should I lend money? Will I get my loan back? Is lending money good or bad?
The answer to this last question is yes and no. I will explain both shortly.
When Lending Money is Good
Lending can be a good thing for the lender especially where there is interest involved.
If you find yourself in a position to lend money or anything to someone, it means that at that particular point in time of the person’s need, you are at an advantage compared to that person. You cannot lend from what you don’t have.
The Bible even mentions “the ability to lend” as one of the blessings for obeying God’s commandments:
“The Lord shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow.” (Deuteronomy 28:12, KJV)
It therefore means that it is more desirable to be rich and successful enough to lend money to other people than it is to borrow. This is because borrowing puts the borrower in a financially lower position than the lender. It makes him indebted and vulnerable to the lender.
“The rich ruleth over the poor, and the borrower is servant to the lender.” (Proverbs 22:7, KJV)
When Lending Money is Bad
Lending is bad for the lender when the borrower fails to follow through on a very important part of its definition – the condition that it will be returned.
As mentioned earlier, it is this very clause that distinguishes a loan from a gift. Under normal circumstances, every lender expects to have his or her money back within a certain agreed time frame.
But that is not always the reality.
In fact, a very high portion of personal loans given to family and friends are never repaid. If you expect to be repaid, you’re going to be disappointed and you’re going to start injecting negativity into that relationship.
Yes, unrepaid loan can be a major cause of strain in relationships especially among family and friends. Many people are currently living in bitterness and resentment because they lent money to someone who has refused to or is unable to pay back in time.
If lending could get that bad, how can you protect your money and your relationship?
This is the crucial question that this FINTEL Series seeks to answer over the next few episodes. Ensure to follow up to the end so you can learn how not to be a losing lender.
In the next episode, we are going to examine the various reasons why people lend money.
If you have any questions or inputs on this series, feel free to drop your comments below. I really want to know what you think about the good and bad sides of lending money to someone.