Dear Richard Madeley: My friend wants me to clear a personal debt – how do I tell him no?

Dear Richard,

A friend has asked us to lend him a not inconsiderable sum to clear a personal debt. I’d prefer not to, but he is very persistent – and I understand he has no other avenue at the moment. He is offering security via a charge on his house, but having just turned 60, the most I’d want to lend for is a year – and if I’m honest I just wish this friend had been a shade readier to take no for an answer. What do you think?

— LB, via telegraph.co.uk

Dear LB,

What do I think? One word, two letters. Repeated here a dozen times for clarity and emphasis: No. No. No. No. No. No. No. No. No. No. No. No. 

If your friend were asking for a tenner, a pony or a ton, I’d probably shrug and say, ‘Why not? He’s a mate, isn’t he?’ Or if he were a close, trusted friend – but then you wouldn’t be writing to me, would you, LB?

Here’s what worries me. First, the size of the loan asked for. It must be pretty substantial if your friend is offering the roof over his head as a guarantee. And you don’t say whether he’s offered to pay interest, if only to cover inflation. Let’s say the sum involved is £20,000. At current inflation rates you’d be down £400 on the loan after just one year, more if inflation goes up again. And what is the term of the loan? One year? Three? Five? It’s all so vague, LB. I don’t like it one bit. 

Here’s something else I don’t like. Why are you the ‘only avenue’ for this person? That tells you everything you need to know about his credit rating: he can’t get an accredited loan institution to play ball with him. So he’s come knocking at your door.

And another thing. He won’t stop knocking, will he? So I imagine he’s trying to guilt-trip you into giving him the money. But guilt has no place in a properly constituted loan. This kind of persistence signals real desperation to me. 

Which prompts this final question. Why is he in debt? Do you know? Here’s what I instinctively scent, LB. This is a financially disorganised person on his uppers and so desperate he’s offering his own home as collateral. How do you know he hasn’t made exactly the same pitch to other ‘friends’? If he defaults on the lot of you, you’ll all be scrambling for a slice of compensation pie.

So I’ll finish where I started. Repeat after me: ‘No.’

Now call your friend and say it. 

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