Finance Questions? Ask a Financial Expert for Answers ASAP
Dear Friend,Hello and welcome. Thank you for providing an opportunity to assist you.
Well... No. When you loans someone any money, it is required to protect your interest by getting an IOU signed, or securing your interest in any other manner such as taking a promissory note, etc.
Unless you do this, you are just lending the money on a "good faith basis" and if the person does not return your money, there will be no way you would be able to recover that. If you wish to secure your money, it is required that you document the debt.
Law does not prohibit you lending money without documenting it. BUT in case of a default, you tend to lose.
I am sure this would help.You may please leave a positive rating if this helps as this is the only way we get compensated for assisting you. Alternatively please feel free to reply back if you need further assistance.Warm Regards
Ok. This is not exactly what I looked for initially, so I would like to offer a follow up question based on your answer: what different ways exist to secure your interest when you loan money? Can you give more details about the 'promissory note' ? On a practical level, how can one be tactful about asking someone to sign an IOU?