There seems to be an increasing number of stories about people borrowing money from older adults.  Although the information is only anecdotal there are several similarities in the stories.  The lender is generally over the age of 70.  The borrower is typically employed and although younger, not without substantial life experience.  There are multiple instances of borrowing, with repayments taking place along the way, but the loan amounts increasing with each request.  The borrowing is taking place from multiple lending sources.  No documents are signed.

What’s the cause of this borrowing?

Some reasons for borrowing from older adults include:

  1. The borrower has the belief that the older person does not “need” their money (e.g. they aren’t raising a family, saving for a house, etc.);
  2. Borrowers may be looking for quick cash and the older adult is more likely to have it readily accessible in bank accounts;
  3. The borrower does not have good credit, cannot qualify for a traditional loan, and is looking for alternative lending sources with low or no interest;
  4. Unprecedented household debt levels means that even though their credit may be fine (because they are paying at least the minimum necessary to service their existing debts) they do not qualify for additional credit;
  5. The borrower is hiding issues from another family member (e.g. addiction) and does not want any ‘audit trail’ about the loan.

Here is where this gets tricky.  Adults have the right to handle their money in a way that fits with their values and lifestyle as long as it is legal and they are considered mentally capable.  Some observers may wish to get involved by giving their opinion about the lending activities or even suggesting that it be stopped.  This is likely not the best approach because it risks your relationship with the lender and can place the older person’s dignity at risk.  Another approach, for family and friends as well as professionals is to ask the following:

  1. Has anyone ever asked you for money or for a loan?
  • How would you/do you handle this type of situation?
  • If it happens again would you be willing to talk with me first before taking action, regardless of how small the request is?
  1. Does anyone currently owe you money?
  • If so, have they borrowed money before and have they paid it back?
  • Do you have anything in writing?

This is emotional territory – give the lender ammunition to refuse lending money

Older persons who have loaned money, even if they have been repaid, may be embarrassed by the situation.  Make sure you openly address this, commenting on their kindness, and the difficulty that most of us have when dealing with unexpected requests for money.  One suggestion is to remind the lender that money is available at record low interest rates from financial institutions.  A formalized loan helps the borrower improve their credit rating by paying it back on time.  If the individual is unable to obtain a traditional loan then they are likely a poor credit risk.  They need to concentrate on improving their credit instead of borrowing more from friends and family.

Give the older adult your support as well as solid reasons for refusing to loan money.  They may feel vulnerable about fracturing family relationships.  Remind them that often the borrower has an insatiable need for money that they would never be able to satisfy.

*photo from Hans via Pixabay