Who do we trust when lending money?

Many people sometimes require a loan and we are in a position to help out. In some cases, they could be people we are willing to lend money to without expecting them to pay interest. In other cases, we might want to loan the money to them but we want it to be a business transaction. Hence, we would want them to pay back the loan with some interest. However, the problem in most cases is not the individual agreeing to take the loan and to pay back with the interest. It is often an issue of the individual not paying back the loan. Hence, whenever you want to loan out money, you would want to know who to trust when you want to lend money. This article will discuss some ways you can know who to trust when you want to lend money.

Start with smaller money that you can forfeit
One of the ways you can know who to trust when lending money is by considering those that you have given loans before. If you have given an individual loan before and they return it, then you can trust them when next they come for another loan. If they did not return the previous loan and were still confident enough to ask for another loan, you will know not to trust them to return the loan. For people who have never taken a loan from you before, you might decide to give them a little amount that you can forfeit to see if they will return it as agreed. If they do, it is a sign that you can trust them next time. 

Get witnesses and have the person sign an undertaking
Another way you can know who to trust when you want to loan out money is by getting witnesses and making them sign an undertaking. This should include the amount for the loan, the amount the individual is expected to pay back, and when the individual is expected to pay back to loan. The undertaking could also include collateral that you can pick up in case the person does not pay back the loan on time. With this, you would have official documentation of the transaction that you can tender in a law court should the need arise. Hence, if the person does not pay back as agreed, you could seize an item worth the amount from the individual as agreed in the undertaking. You can read lending money experiences to know what other people have gone through when they loaned out money and how they do decide who to trust and give loans to.

Give loans through a professional loan company
Another way you can give out loans without having to worry about if the person will pay back or not is to use the services of professional loan companies. The professional loan companies will be able to do a background check to be sure the person can pay back before giving them the loan. Should the person fail to pay back, such loan companies will know how to go about getting your loan back from the individual.