Q&A: Coworker asked to borrow money, what should I do?
Question: Coworker asks me for $1000 randomly, and I ask why. He says that he is visiting nephews in Utah, and needs money for general expenses including buying gifts for his nephews. I was skeptical so I asked him if he would have it notarized (agreed) I asked how he would pay me. He said he gets his pension from his last job on September 1st ($~26000). This sounds like its too good to be true, and $1000 makes up most of my emergency fund. What do you think I should do?
Short answer: No. Just no.
Long answer: NOOOOOOOO! If you are ever going to lend money to someone who you have a personal relationship with, plan on giving them that money.
Even if it seems like a great deal (it's a 100% return), there is no guarantee that you will be able to hold him to paying back this debt. Having a notarized contract means absolutely zilch. They can skip out on the contract, and you have no other option than to take legal actions which is costly and time consuming.
Another major reason to not go through with this deal is the fact that this is your emergency fund. Even if you were to approach this as a business opportunity, you don't have the reserves to make this investment worthwhile AND assume the risk of default. There is a reason why he came to you and didn't go to an alternative lending facility that would charge less than 100% interest....unless there's a catch. And there is.
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