The Pitfalls of Borrowing Money Between Friends
People often say that there are two things in life that should not be lent to others, and those are a car and money. If you lend your car to someone and they get into an accident, the insurance company won’t compensate for the damages, and you’ll have to bear the responsibility for any significant losses. Similarly, when you lend money to others and they don’t repay you, there’s not much you can do, and you’ll be left with regret and sighs of disappointment. We may be aware of these principles and may have even experienced not getting our money back after lending it to someone. However, sometimes we are forgetful and easily trust others’ promises, or due to wanting to save face, we lend money to people who should not be borrowing it.
Accidentally fell into the pit of borrowing money
After graduating from graduate school, I found a job, and my whole family moved to a new city. Shortly after settling in, we attended an American church that had a Chinese fellowship. The church was conveniently located next to a university, and every weekend, many Chinese international students would come there to participate in activities, make new friends, and exchange various information. The church was always bustling with energy and excitement.
The person in charge of the Chinese ministry at the church was a young man named X, who had recently graduated from a seminary in the United States, having come from the mainland China years ago. After graduating, the church hired him as an assistant pastor specifically to oversee the Chinese ministry. X was very friendly and enthusiastic, and I had a good impression of him.
One day at noon, X invited me to have lunch together at a nearby restaurant. During the meal, he shared some stories about his faith back in China and various experiences since coming to the United States. He appeared to be deeply devoted to his faith and had many positive testimonies as a Christian. Later, he mentioned that he was currently facing some financial difficulties and asked if he could borrow $5,000 from me to cover him for two weeks. He emphasized that he would definitely pay me back after the two weeks. Although I had known X for less than a month and didn’t know him well, I had a strong trust in pastors at the time, possibly due to having some good church friends. Without much thought, I immediately agreed to lend him the money. In reality, our bank savings were at most five to six thousand dollars.
That evening, my wife and I discussed it and decided to lend $3,500 to X. We were concerned about his urgent need, so the next day, we hastily wrote a check and gave it to him without even thinking about having him sign an IOU. He expressed gratitude for our help in his pressing situation.
Two weeks passed, but X didn’t return the money as he had promised. He explained that he still needed more time. This dragging-on continued for over half a year, and he never brought up the repayment again. I felt embarrassed to ask him about it, concerned about losing face. However, I started regretting my decision to trust him so easily and lend him such a large sum of money. After all, my financial situation wasn’t comfortable, and earning a few thousand dollars through work during school was truly challenging. Whenever my wife suggested asking him for the money, I always avoided the topic, saying, ‘He will repay it,’ when, in fact, I had no idea when or if he would ever pay me back.
Later on, some people in the church started to leave X’s fellowship and join other small groups for activities. My wife and I were not very active in the fellowship and didn’t like to inquire about gossip. We knew that something unusual was happening in the church, but we were completely in the dark about the details.
One day, a friend from our fellowship, W, suddenly asked me if I had lent money to X. I was surprised because I had never mentioned anything about lending money to X to anyone. I told W that I had lent him some money a few months ago. W then informed me that X had borrowed money from many people in the church. Some loans had been outstanding for a long time, leading to significant disputes. Some of those involved had reported the matter to the church, and W was currently assisting the church in conducting a detailed investigation. This news was completely unexpected for me. How could X borrow money from so many people?
It turned out that two years ago, when property prices were relatively low, X and another friend pooled together over a hundred thousand dollars to buy a standalone house. Due to his relatively modest salary, his wife being unemployed, and having children, their household expenses were quite significant. Therefore, it’s not difficult to imagine the economic pressure they faced.
Two months later, X handed me a check for $3,500 issued by the church and apologized for taking so long to repay. Later, I heard that the church had helped him repay all the money he borrowed in one go. Soon after, X found a new job, and his whole family moved to another city.
Friend’s fundraising went down the drain
A few years ago, there was news reporting about a company’s boss, Mr. K, who was a member of the Chinese Communist Party, a representative of the local People’s Congress, and had illegally raised and embezzled an enormous amount of money, reaching several billion Chinese yuan. K was my good friend for many years, and I almost participated in his fundraising plan.
I got to know K just after graduating from high school. That summer, we both joined the local basketball team for training, preparing to compete in the county basketball tournament. After the first night of training, five or six of us walked home together, passing by a restaurant. K told everyone to wait for a moment as he wanted to treat us each to a bowl of “Three Delicacies Noodles.” His generous gesture pleasantly surprised us all. At that time, a bowl of “Three Delicacies Noodles” cost half a day’s wage for an average person and was considered quite expensive. My mother sometimes gave me a little money to eat noodles, and I always chose the more affordable “Bald Noodles” and had never tasted “Three Delicacies Noodles.”
K was a substitute player in our basketball team, but he was our best cheerleader during matches. He had a good relationship with everyone, loved to crack jokes, and always made us laugh.
When we were hanging out with K, his old classmates loved to bring up funny and mischievous stories from his childhood to tease him. In the third grade, K got into a fight with a classmate and was scolded by the teacher. He held a grudge against the teacher and, the next day, secretly poured rat poison called “Three-Step Death” into her hot water bottle. When the teacher made tea, she found that the water in the cup turned black and suspected that some mischievous child was playing a prank. She called a few naughty students to her office for questioning and discovered that K was the culprit. He was expelled from school soon after. This happened during the period of the Cultural Revolution when many children stayed at home and didn’t attend school, so the third grade was K’s highest level of education.
K came from a well-off family; his father and grandfather were businessmen. He was clever in his dealings, low-key, slick, and generous to his friends. After the start of economic reforms in China, he began working as a procurement officer in a company. His business acumen quickly showed, as he was shrewd in business dealings, particularly generous to his superiors, and extremely hardworking. Later, he started a chicken farm, established a retail and wholesale company, and by chance, he met a Hong Kong businessman with whom he started a clothing factory, creating a chain brand. Eventually, he even established a hospital. His businesses kept growing, and he became very successful. After more than two decades of hard work, he owned numerous private enterprises, became a millionaire, a prominent figure in the local community, and a well-known private entrepreneur in the province.
We have several good friends who have maintained regular contact with K. Every year during the Chinese New Year period, we all find a time to get together, chat, and have a meal. Some of our classmates who are involved in business also hoped to collaborate with K, but he was always cautious in this regard. He knew that these friends were independent thinkers who wouldn’t blindly follow his instructions. After I graduated from university, I kept in touch with him. Back then, purchasing bulk commodities was straightforward, and I bought my bicycle and TV from K. On one occasion, I even spent 170 yuan to buy a bottle of Moutai liquor from K as a gift for my father-in-law.
During my first visit back to China, a few friends invited me to visit K’s company, and he treated us at one of the best hotels in the city. While everyone was in a good mood, two friends took the opportunity to ask K if he could take care of their investments and provide them with dividends. K responded briskly, saying, “No problem. Next week, each of you brings 100,000 yuan to me, and by each Chinese New Year, you’ll receive a dividend of 20,000 yuan.” The friends asked, “With such a significant investment, can you write a loan agreement or sign a contract?” K replied, “No friend who invests with me needs to sign any agreements or write loan documents. If you want to invest, just come. Many people want to invest with me.” The following week, the friends all handed over 100,000 yuan to K. I was the only one who didn’t participate because I genuinely didn’t have the money. However, it seemed that our other friends were quite well-off, and 100,000 yuan was a small sum for them.
After a few years, the friends told me that during Chinese New Year, K indeed paid them each a dividend of 20,000 yuan for three to four consecutive years. Two of the friends even invested more money with K later on. As K’s investments expanded, he needed more capital. When he applied for loans from investment banks, he falsified some company documents and materials. This led to loan application rejections, cash flow difficulties, and some people began demanding their investment money back from K. The situation escalated, and eventually, K’s company’s financial chain broke, leading to the financial crisis.
One of our friends, upon hearing the rumors about K, immediately went to K’s place and demanded his money back. Another friend, along with his son-in-law, stayed at K’s house until late at night and finally succeeded in pressuring K to return the money. As more and more people went to K’s place to ask for their money, he found himself unable to repay everyone, so he decided to flee and went into hiding. Not long after, the police arrested K for forging documents and engaging in illegal large-scale financing, and he was sentenced to nine years in prison. It was said that many of the people who invested with K were high-ranking officials at the provincial and municipal levels, so after the incident, K received favorable treatment from these individuals, resulting in a relatively lenient sentence.
A few years later, the friend who invested the most with K told me that a few months before K’s incident, K had asked him to lend him one million yuan for capital turnover. He managed to gather more than 700,000 yuan for K, including over 300,000 yuan from his son. Later, he received back a portion of the money, but he still had over 300,000 yuan that he couldn’t get back. He felt most distressed about lending his son’s money to K. Once, he and a few other friends even went to visit K in prison, and K seemed to be in good spirits. He received relatively good treatment in jail and promised to repay them once he was released. However, I didn’t know if K actually repaid anyone after his release.
Instances of people borrowing money and not repaying are common, and when dealing with significant sums, one must be extremely cautious. Sometimes, when someone asks for help, you may feel a bit uncomfortable not lending them money, worried that it might seem stingy or that you won’t experience the joy of being a generous and kind person, which may lead to a strained relationship with some friends. However, such outcomes are much better than finding yourself in unexpected situations in the future. If you lend out money and can’t get it back, the debtor may avoid you and become unreachable when you try to contact them. When you ask for your money back, they might make excuses and beat around the bush, and some might even get angry with you, saying things like, “I don’t have the money, but I have my life.” If the amount you lent is significant, like hundreds of thousands, even your life savings, you may lose sleep at night, and it could even ruin your family.
As the saying goes, “Don’t believe in people who seem honest and righteous; beware of those who are unscrupulous.” It means not to trust people solely based on their apparent sincerity and sense of righteousness; one must be cautious of others’ true intentions. When lending money, don’t overestimate your judgment. Don’t assume that just because someone is a friend or holds a higher position or has wealth, they will definitely repay you. Some pastors, government officials, or wealthy friends may not have high moral character, and they might not return your money on time. While caring for others, it’s essential to be a little shrewd and not lend out large sums of money, lest you suffer a significant loss and regret it, end up in court, or engage in heated arguments, and still not get your money back!
