The Complexity of Loans between Friends

When it comes to personal relationships, particularly friendships, loans often function differently

By Abdullah Usman Morai

In the world of finance, a loan is a sum of money borrowed with the expectation of repayment, usually with interest when taken from banks or financial institutions. However, when it comes to personal relationships, particularly friendships, loans often function differently. They are usually informal, based on trust, and, more often than not, interest-free. But as many have learned the hard way, lending money to friends can be a double-edged sword, fraught with emotional and financial risks.

This article is based on true events, some of which will be highlighted throughout the article, where friends and acquaintances borrowed money for personal reasons—from medical emergencies to starting businesses—and then gradually disappeared, leaving lenders not just financially hurt but emotionally betrayed.

Why Do People Take Loans from Friends?

There are several reasons why individuals choose to borrow money from friends instead of approaching banks or lenders. The primary reason is convenience. Financial institutions have strict lending criteria, including credit checks, collateral, and paperwork, whereas friends offer money with fewer formalities. Additionally, loans from friends are usually interest-free, making them a more attractive option.

Another reason is urgency. Banks may take days or weeks to approve loans, but a friend can offer instant financial support without cumbersome processes. Some people also feel embarrassed about their financial situation and find it easier to discuss their struggles with a trusted friend rather than a formal lender. Borrowing from a friend also eliminates the fear of legal repercussions, which often accompany missed payments to financial institutions.

Real-Life Examples: The Hidden Truth behind Friendly Loans

1. Medical Emergencies

One friend borrowed a substantial amount during a medical crisis involving a family member. The lender understood the urgency and helped immediately. But after the crisis was over, the borrower never brought up repayment and gradually distanced themselves.

A long-time friend urgently needed money for his mother’s surgery. A group of friends immediately contributed, trusting his promise to return the money once his situation stabilized. But once the crisis passed, he slowly distanced himself, eventually vanishing without ever acknowledging the debt again.

2. School Fees for Children

A single mother borrowed money from her close friend, saying it was for her daughter’s school fees. The friend gave her the amount without hesitation. Months passed, and when the lender asked about repayment, the borrower accused her of being insensitive. Their friendship ended bitterly.

Another borrowed money to pay for their child’s school fees, claiming emotional distress, and promising a quick return. Months passed, and while school resumed, the lender never saw a single rupee returned.

3. Food and Basic Necessities

A neighbor, who often joined friendly gatherings, shared that he had no money to feed his family. Touched by his honesty, one friend handed over a decent sum. Weeks later, the borrower was spotted shopping luxuriously, pretending nothing had ever happened. When asked about the money, he acted surprised and walked away.

Some asked for help simply to buy food or cover monthly expenses. These were smaller amounts, but frequent. Over time, they added up. The borrower, meanwhile, continued to maintain an active social life, as seen on their social media.

4. Home Renovation

A friend asked for help to repair his leaky roof during the rainy season. He painted a picture of urgency and despair. After receiving the money, he did renovate—but not just his roof. He upgraded his kitchen and bought new furniture. He never returned the loan, claiming he was still recovering financially.

A friend borrowed for house repairs, which they insisted were urgent. Later, their renovated home became the backdrop of many Instagram posts, while the lender’s messages about repayment remained unanswered.

5. Wedding at home

A man borrowed money from three of his friends, saying it was to arrange his younger sister’s wedding. They supported him generously. Post-wedding, he threw a lavish celebration but avoided the very friends who helped him. When approached, he said, “You should’ve helped me without expectations.”

One borrowed to help marry off a daughter. The lender empathized with the cultural and financial pressure. The wedding was beautiful, but the loan became a forgotten detail afterward.

6. To Start a Business

A budding entrepreneur borrowed money from his closest friend, claiming he needed it to start a food delivery venture. He was passionate and convincing. After receiving the loan, he disappeared—deleting social media, changing his phone number, and vanishing from their shared group of friends.

Perhaps the most frustrating are loans given to help start a business. These often involve larger sums and big promises of future returns. Once the business is running, some borrowers act as if the lender was never part of the journey.

7. Debt Repayment

A friend in a tough spot asked for help to repay a moneylender threatening his family. The lender friend, fearing for his safety, gave him money without hesitation. Later, it was revealed that the story was fabricated, and the borrower had a history of making up dramatic tales to get easy cash.

The Social Media Sting: The most painful part for many lenders is seeing their borrowers enjoy vacations, shopping, and fine dining on social media while ignoring messages about repayment. It’s not just about the money—it’s the blatant disregard and disrespect.

Why Don’t People Pay Back Loans Taken from Friends?

While every borrower has their own circumstances, a consistent set of behaviors and mindsets emerges when friends fail to repay personal loans. At the heart of this issue lies a mix of emotional avoidance, entitlement, and lack of accountability. Several factors contribute to this unfortunate reality:

1. Lack of Formal Agreement: Since loans between friends are typically verbal, there’s no legal obligation to pay the money back, making it easier to ignore.
2. Financial Struggles: Borrowers might genuinely be unable to repay due to ongoing financial issues and keep postponing repayment.
3. Forgetfulness or Avoidance: Some borrowers may claim they forgot, while others deliberately avoid discussing the debt to escape repayment.
4. Taking Advantage of Friendship: Some people exploit friendships, assuming that since there’s no interest or legal contract, the lender won’t press for repayment aggressively.
5. Change in Relationship Dynamics: If the friendship deteriorates over time, the borrower may no longer feel obligated to repay the money.
6. No Set Deadline or Prioritizing Lifestyle Over Responsibility Without a specific repayment timeline, some borrowers treat the loan as a gift rather than a debt, leading to indefinite delays. The borrower is often seen spending money online, which proves they could repay if they chose to.

If Friends Don’t Pay You Back, Your Money is Gone—So is Your Friendship. What Should You Do?

If a friend doesn’t repay a loan, it puts the lender in a difficult position. Should they ask for the money back and risk the friendship, or let it go and bear the financial loss? Here are some possible courses of action:

1. Communicate Clearly: Politely remind them about the loan. A simple, non-confrontational conversation can resolve the issue.
2. Be Firm but Respectful: If the borrower keeps delaying, express that the repayment is important to you.
3. Set Up a Payment Plan: If the borrower cannot pay the full amount at once, suggest paying in smaller installments.
4. Accept the Loss and Move On: If the amount is small and the borrower refuses to pay, it may be better to move on rather than create unnecessary tension.

The True Loss: More than Just Money

The deepest wound isn’t financial—it’s emotional. The borrower didn’t just take your money; they damaged your trust. They treated your kindness as weakness. It forces you to question the value of the relationship and leaves lasting scars. You lose your peace, your faith in friendship, and sometimes, even your own willingness to help again.

Can One Forget That They Have Taken a Loan, or Do They Pretend?

It is possible for someone to genuinely forget a small loan, especially if it was given in a casual setting. However, in most cases, people do not forget—they choose to ignore the loan. The borrower may remember but pretend to have forgotten, hoping that the lender will never bring it up again. Some may even expect the lender to write off the debt as a gesture of goodwill.

Is It Good or Bad to Give a Loan to Friends?

Lending money to friends is neither entirely good nor entirely bad—it depends on the circumstances and the people involved. If your friend is trustworthy and has a history of repaying debts, lending money may not be a risky decision. Helping a friend in need can strengthen bonds and foster goodwill.

However, if the friend is financially irresponsible or has previously failed to pay back loans, lending money can damage both your finances and your friendship. The biggest risk is that, if they fail to repay, you may lose both the money and the friendship, leading to resentment.

It is always advisable to assess whether you can afford to lose the money before lending it. If the loan is substantial and you cannot risk losing it, then it may be best to politely refuse or offer an alternative form of support.

Is It Better to Lose Friends Instead of Money or Both?

The answer depends on the importance of the friendship and the amount of money involved. If a friend refuses to pay back despite multiple reminders, it may indicate that they do not value the relationship as much as you do. In such cases, losing a friend may not be a great loss, as they have already proven themselves unreliable.

However, if you value the friendship more than the money, it might be better to forgive the debt and preserve the relationship. It is essential to weigh the importance of financial stability against emotional bonds and act accordingly.

Final Thoughts

Lending money to friends is an act of kindness, but it must be done with caution. The emotional strain that comes from an unpaid loan can often be more damaging than the financial loss itself. If you choose to lend money to a friend, it is wise to do so with clear terms, such as setting a repayment deadline and putting the agreement in writing, even if informally.

It is also important to prepare for the worst-case scenario. Before lending, ask yourself: Can I afford to lose this money? If the answer is no, reconsider your decision. Instead, offer alternative ways to support your friend, such as helping them find financial resources or guiding them toward better money management.

Ultimately, money should never take precedence over trust and mutual respect in friendships. However, if someone repeatedly exploits your generosity, it may be a sign that the friendship itself is not built on mutual values. In such cases, it is better to learn the lesson, move on, and be more cautious in the future. Financial responsibility is an individual trait, and sometimes, the best way to preserve both your friendship and financial well-being is to say no in the first place.

Read: The Power and Purpose of Minimalism

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Abdullah Soomro, penname Abdullah Usman Morai, hailing from Moro town of Sindh, province of Pakistan, is based in Stockholm Sweden. Currently he is working as Groundwater Engineer in Stockholm Sweden. He did BE (Agriculture) from Sindh Agriculture University Tando Jam and MSc water systems technology from KTH Stockholm Sweden as well as MSc Management from Stockholm University. Beside this he also did masters in journalism and economics from Shah Abdul Latif University Khairpur Mirs, Sindh. He is author of a travelogue book named ‘Musafatoon’. His second book is in process. He writes articles from time to time. A frequent traveler, he also does podcast on YouTube with channel name: VASJE Podcast.