The Pitfalls of Loaning to Friends: Biblical Insights and Life Lessons

I shouldn’t have been surprised to learn that Solomon and my parents agreed on not co-signing someone else’s loan.

This is the essence of Solomon’s counsel to his students.

My child, if you have given your pledge to your neighbor,
if you have bound yourself to another,

You are snared by the utterance of your lips,
caught by the words of your mouth. (Proverbs 6.1-2)

The person who cosigns a loan, or provides a pledge for payment, places themselves between the creditor and the debtor. If the debtor fails to pay, they are snared by their commitment and must pay the debt themselves.

Advice from Experience

My parents weren’t stingy, but like Solomon, they were far more experienced than I. They knew the pitfalls that arise from loaning money to friends with bad credit.

I took my parents’ advice and never co-signed a loan. However, I have made plenty of mistakes about friends and money.

From my experience, I’ve learned two key insights:

If a friend struggles to secure a loan, it often suggests a history of financial instability or challenges in meeting debt obligations.

When we either lend money to or co-sign a loan for such individuals, we run the risk of not receiving our money back.

Even more distressing than the potential financial loss is the possibility of losing the friendship.

When repayment is not made, it’s common for these individuals to distance themselves, resulting in strained or lost friendships.

One of my friends counseled me and told me how he handled situations like this.

When someone asks him, “Can I borrow some money?”

He says, “No, I don’t want to lose you as a friend, but I will give you the money.” Or just simply no and not help them at all.

A Serious Issue

Co-signing loans or lending money to friends might not appear as a profound spiritual matter. Yet, Solomon deemed it crucial for our well-being.

My father, an attorney, managed various family issues, especially concerning their estates. He often observed that one of the most significant challenges among family members revolved around their handling of financial matters.

Solomon advised his listeners to handle financial matters appropriately. While this might seem strict, it ultimately helps preserve both friendships and potentially your money.

So do this, my child, and save yourself,
for you have come into your neighbor’s power:
go, hurry, and plead with your neighbor.

Give your eyes no sleep
and your eyelids no slumber;

Save yourself like a gazelle from the hunter,
like a bird from the hand of the fowler. (Proverbs 6.3-5)

There are seven imperatives in these three verses. The point is clear: we should do everything in our power to keep our financial dealings with friends and family clean.

I once saw a sign behind a meat counter in a store. It said, “Your lack of foresight and poor planning does not constitute a necessity for me.”

I think we should apply the same principle to loaning money to friends.

Giving Vs. a Loan

Some of my worst experiences have come from loaning money to friends who were not disciplined enough to pay it back. Not only did I lose the money, but I also lost a friend.

On the other hand, some of my best experiences have come when I freely decided to give what I had to someone else.

Jesus put that second category best.

“Give, and it will be given to you. A good measure, pressed down, shaken together, running over, will be put into your lap, for the measure you give will be the measure you get back” (Luke 6:38).

YouTube Video

Rudy Ross and I discuss this passage on YouTube today. It is on the Bob Spradling channel.