Lending money has become increasingly common among friends and acquaintances, particularly among young adults.
It’s an act that hinges on trust and the belief in the debtor’s ability and willingness to repay. However, not all debt situations end amicably, leaving the lender in a difficult position. Therefore, it’s crucial to be able to spot a terrible debtor before you find yourself in an awkward or financially straining situation.
In this enlightening piece, we’ll walk you through the tell-tale signs and behavioural patterns that can help you identify a potential bad debtor.
Inconsistent financial stories
If a potential borrower often changes their story about their financial status or needs, this inconsistency can be a red flag. It may indicate that they are not being transparent about their financial situation.
Lack of a stable income
A person without a stable income or a regular job may struggle to repay a loan. It's important to consider whether they have the means to make repayments before lending them money.
No concrete repayment plan
Be wary of lending to someone who does not have a clear and realistic plan for repayment. A serious borrower should be able to outline how and when they will repay the loan.
Poor credit history
A person’s credit history can reveal a lot about their financial behaviour. A history of missed payments or defaults is a strong indicator that they might not be a reliable debtor.
Pressure for quick approval
If someone is pressuring you for an immediate loan without giving you time to consider, this can be a sign of desperation or irresponsible financial behaviour. A responsible borrower respects the lender’s need to think it over.
This article was written by ChatGPT, the artificial intelligence chatbot.