More than 60% of Americans have borrowed money from or lent money to friends and family in the last five years, according to LendingTree’s recent survey of over 1,000 Americans. With 35% of those who have lent money nearly a third of borrowers and lenders reported negative consequences resulting from the loan, ranging from hurt feelings (14%) and resentment (10%) to irreparable harm to the relationship (4%).
- 44% have borrowed money from a family member or friend in the last 5 years. Parents (43%), siblings (19%) and friends (19%) were the most common lenders among respondents.
- 51% have loaned money to a family member or friend in the last 5 years. Siblings (27%), friends (26%) and parents (17%) were the most common borrowers among respondents.
- 24% of family/friend lenders regret their decision to lend money in the first place.
- More than one third have not been repaid
- Nearly a third of borrowers and lenders reported negative consequences resulting from the loan:
- Hurt Feelings: 14%
- Resentment: 10%
- Decreased Contact: 10%
- Verbal Arguments: 8%
- Uncomfortable Family Gatherings: 6%
- Irreparable Harm to Relationship: 4%
- More than 1 in 5 borrowers (22%) have not yet paid back their family member or friend. The costs of not paying back their loan could be adding up, as 11% said they were charged interest.
- 65% of borrowers felt guilty about asking their family member or friend for a loan. Despite the guilt, 67% said they wouldn’t hesitate about asking for another loan.
Americans are more willing to lend and borrow from family than friends
A quarter of survey respondents said they would not give their friend a loan, while only 17% said the same for family members. When it comes to borrowing, the amount someone is willing to borrow increases when borrowing from a family member. For amounts more than $20,000 they were more likely to request help from a family member than a friend.
Similarly, survey respondents were also more likely to lend larger amounts of money to family members. Respondents were twice as likely to be willing to lend an amount over $20,000 to a family member than to a friend.
It is worth nothing that millennials are the most likely generation to borrow money from and lend money to loved ones. Overall, 64% of millennials have lent money to friends/family in the past 5 years, and 59% have borrowed money from friends/family in the same time frame. Additionally, only 15% of millennials would not consider lending money to a friend, compared to 21% of Gen Xers and 38% of Baby Boomers who would not consider lending to a friend.
Why Americans are borrowing and lending money to others
Needing to borrow money from a loved one is usually not something you expect to happen. But sometimes, it may be the most practical and affordable option for borrowing money. The following are just a few reasons why Americans are lending or borrowing money:
- Monthly Housing Costs (rent, mortgage)
- Borrower: 22%
- Lender: 21%
- Auto Expenses
- Borrower: 14%
- Lender: 16%
- Pay Off Debt
- Borrower: 11%
- Lender: 13%
- Child-Related Expenses
- Borrower: 11%
- Lender: 10%
- Medical Costs
- Borrower 9%
- Lender: 8%
Full survey findings and additional details can be found here: https://www.lendingtree.com/personal/study-lending-between-family-friends/