Be prepared to not be repaid, especially if it is going to a family member. If you can't afford to lose $500, don't lend $500, even to a family member.

Before handing over money, ask what the loan is for, what the borrower's repayment date would be, and ask about when they get paid. By focusing on repayment, you set the tone of the loan from the start.

If you loan $1,000 for example, state clearly that you want it repaid in four installments of $250 every payday. Being firm on this means you have a high chance of being repaid. It also means the borrower has to agree to it before you give them the money. Charging interest is voluntary, but often creates more work to calculate and collect it, and may not be worth the hassle.

With the borrower agreeing to your terms, get as much as you can in writing, preferably on email or WhatsApp, and take screenshots of it for your records. You'll need confirmation on the amount borrowed, and evidence of the agreement regarding the repayment plan just in case something goes wrong later on. You can go all the way and ask the borrower to sign an 'IOU' - this may seem aggressive, but it is your money after all, and you have a right to get it back one way or another.

A repayment plan is essential to get your money back without drama. It takes a bit of monitoring and the courage to not give up or give in. Borrowers can be very good at using emotional language to miss a payment (or ask for more money). Keep focused and collect what is owed and you have a good chance of saving the friendship or relationship. Our repayment guide in the next section has a suggested plan of action should you need help working out how to ask for money.

If you go ahead, it is a very good idea to protect yourself legally. A document stating the amount of money borrowed will help you avoid any misunderstandings. If things don't go to plan later on, the document can also be used to settle a dispute. 

A standard loan document should cover:

1. The amount borrowed
2. The interest rate (if applicable)
3. The length of the loan – start date, and the final repayment date
4. Repayment terms – i.e. 10% of the amount borrowed every two weeks until it's repaid
5. Penalties for late or non-payment – if applicable
6. Names and signatures of the lender and borrower

You can download our sample loan agreement document here and edit it to your needs. Remember to print two copies so you both have a copy.

So you've lent money to someone, and are unsure of the best way to collect it? Our suggested methods may be slightly aggressive, but they are proven to work. Remember - it's your money after all, and you are entitled for it to be repaid on your terms. 

In this section we outline our suggested process with real-life scripts and timelines you can work with. The purpose of these scripts is to get your money back efficiently with no 'wriggle room' to delay or defer repayments. We suggest sending these scripts on email, Facebook message and WhatsApp - it may seem aggressive, but the point is to get the communication clear and understood. Borrowers have a habit of ghosting their lender - our process minimises their opportunities. The scripts are free of emotion or feelings, because that's not helpful. Instead, their purpose is to get right to the money, and get it back into your bank account. Fast.

The most important ways this works (i.e. you get repaid) comes down to:

• Insisting on being repaid in full (or in installments) on the borrower's payday.
• Communicating your expectations of payment before payday, during payday and if a payment is late.
• Repeating the cycle of scripts 3, 4, 5 and 6 as payments are made. This will help you clear the balance owed down to $0.
• Send these using email, WhatsApp AND Facebook - the borrower needs to know you're serious, otherwise you just won't get repaid. 
• If you get pushback and refusal to pay, use script 7 below to shape the borrower's behaviour. 

If you have any suggestions for improvement, contact our research team.

Subject: Loan Repayment

Hi (name of borrower)

I hope all is well. I need to have the loan repaid within the next 14 days. If you're unable to make full repayments, we'll go for 25% of the balance ($insert balance) over the next 8 weeks. A change in my personal financial situation means I need this money repaid with urgency. 

Please let me know if you can make full repayment within 14 days, or prefer four payments of $(insert 25% of loan balance) over 8 weeks? Can you also confirm when your payday is, so I know when to expect the repayment(s)?

Thanks, 
(name)

Subject: Loan Repayment
​
Hi (name)

Thanks for confirming your payday date and preferred repayment amount of $(insert amount). I will follow up with you just before payday for the agreed repayment amount. 

Thanks
(name)

Subject: Upcoming Payment

Hi (name)

Just checking you are on track to make that $(insert amount) payment tomorrow? 

Thanks
(name)

Subject: Payment Due

Hi (name)

Let me know what time you are putting the $(insert amount) payment through today (if you haven't already) when you have a moment. 

Thanks
(name)

Subject: Late Payment (Urgent)

Hi (name of borrower)

I just checked my bank account and see I've not received the agreed money yet. Can you let me know when I expect it, as I am relying on it to be repaid today? 

Thanks
​(name)

Subject: Payment required

Hi (name)

Payment is needed per our agreed terms, which I am urgently relying on. Please confirm when you will be able to make payment urgently. As the loan has been made in good faith, it needs to be repaid pursuant to our agreed terms on your payday, without exception.

​Thanks
(name)

So I used these scripts to get back quite a lot of money from a professional user. They were exactly what I needed, and didn't find them aggressive at all. The results were fast - I got repaid within a few weeks. It was quite funny because the money was coming in $100 and $200 amounts, so I knew he was borrowing it from other people. At one point the borrower told me to "go easy bro" which meant the money was coming, he was just stressed out. Anyway, I got my money back, and that's all that matters because this guy is a complete user. You just have to keep to the scripts and send them without hesitation. The message is clear, it's up to them to action or get more emails and messages.
- Hamish, Auckland

I lent to a friend, but didn't have an agreement about getting repaid. When I asked, it was like I was borrowing from her! It was very annoying and not worth the hassle. Your guide got my money back without the drama - thanks MoneyHub!
- Joan, Tauranga

If you've lent money and it's not being repaid, and you need it more than the friendship, the law can help. Firstly, you will need to have a loan agreement, or written evidence of the loan (emails, phone messages etc). The more legitimate and detailed the loan agreement, the better your chances in court. 

If you have not had success in getting repaid and have lost patience, as long as there has been activity on the loan within six years, you can use the legal system. To be clear, under the New Zealand Limitations Act, lenders have a six-year period to reclaim a debt after they are due from their borrower. 

If the debt is older than six years, generally you can't take the borrower to court over it, unless:

• A court has ordered the borrower to pay, or  
• The borrower has paid a portion of the debt within the last six years, or 
• The borrower admits in writing that they owe you the money.

The six-year period begins from when the person borrowed the money, or when they last made a part-payment.

Legal options

1. ​The Disputes Tribunal is quick, cheap and informal, and can settle claims for up to $30,000.
2. A District Court hears cases up to $350,000, but is expensive and time-consuming. If your loan is above the $30,000 limit set by the Disputes Tribunal, it's a good idea to seek legal advice. 

I loaned around $4,000 to a friend and she repaid it over a few months, so there wasn't much drama and we remained friends. That changed when about a year later she asked me for another loan, and while I knew she needed it, my own situation had changed so I couldn't afford it. She began hounding me on WhatsApp as she was desperate - I ended up ignoring the messages. We've not seen each other for a while. I feel guilty but her financial needs are not my responsibility. 
- Katie, Auckland

I got myself into something of a ridiculous situation a few years ago with a friend from a place I used to work at. He asked me for about $10,000, and I don't think he explained why he needed it. I was cashed up at the time, so I happily lent it. Well, like a shark drawn to blood, fairly soon the total amount advanced was around $35,000. He had a good job so I didn't think there was going to be a problem to be repaid...but then there was. He wasn't forthcoming with repayments, which gave me a very sinking feeling. I did get the money back, but it was through some 'tough love' and hassle. Our friendship pretty much collapsed after I got the last payment. Never again. 
- Chris, Auckland

I lent my brother some money because he had lost his job and was behind in rent and he told me without it his two kids and girlfriend would be kicked out of their home. He then asked for some more money after that, which I obliged. He gets back on his feet with a good job and repays me. A few years later I asked for a short term loan as we were moving house and there were some extra costs to settle right away. He refused me, and his girlfriend (now his wife) told people I was a scrounger. Lending money isn't worth the emotional rollercoaster.
- Lisa, Christchurch

Lending money brings back a lot of bad memories. I lent a friend about $800 for an airfare so he could go on holiday with us to Australia. He had enough money for the few days we were away, and I didn't think anything about getting repaid. Sadly, it was not to be as I hoped. He insisted on repaying that $800 by way of 'favours' or 'portions' - he proposed that I come to the supermarket with him to shop so he could put my stuff on his credit card. He also said don't bother about a birthday gift as a way of loan 'forgiveness'. This didn't work for me and I asked for the money in full, but he didn't have any. Yet I knew he was spending money like usual - nights out, new clothes, booze etc - it really annoyed me. I got the rest back but it was fairly brutal.
- Dave, Auckland

Lending money to a cousin went so wrong for me that I only feel resentment for them and, sometimes, one side of my family who panders to him and his ways. He told me the money was for his business, but I found out he bought bitcoin just before it crashed. He plays a victim and has his family convinced he wasn't an idiot. Getting my money back is very much a work in progress. 
- Marissa, New Plymouth