It’s awkward to be asked by a friend or family member for a loan you don’t want to give or don’t believe they can repay. Saying no can have social repercussions. Frederick Wherry, Kristin Seefeldt, and Anthony Alvarez examine the strategies potential lenders use to make these interactions less awkward. That can mean “saying no without saying so.” Or it can mean a gift cloaked as a loan.
The researchers recruited fifty-seven people for interviews through a nonprofit organization that helps low-income people build their credit ratings and financial stability. The in-depth interviews included questions about how people had responded to loan requests from family and friends. Sometimes, of course, the answer is an uncomplicated yes. But potential lenders are often in the position of assessing the would-be borrower’s sincerity, wondering: Is the need genuine, and/or will they work to repay the loan? Lending decisions often hinge on those questions.
Sometimes the interviewees openly denied loan requests, or they pressed hard for repayment. In those cases, though, they understood that their actions could damage the relationship. Preserving the relationship without being pressured into making a loan was more challenging.
“Obfuscating denial” is one strategy people employ. As one interviewee said, “I have never said no but I’ve lied,” telling someone he didn’t have the money when he actually did. In that case, the denial was “[b]ecause I felt like they wasn’t credible.” In another case, a woman became fed up when her cousin’s wife, who was also her coworker, repeatedly failed to repay money she borrowed. The woman responded by “trying to put some distance between us,” denying her cousin’s wife the opportunity to ask for loans she didn’t want to give.
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Negotiation is another strategy. Rather than saying no, potential lenders may respond by detailing when they need repayment and why the timing is important. Or they may say yes but delay the transfer of the money to give the borrower time to rethink or find another source. This strategy doesn’t always work, though. One lender told his wife’s sister that he needed to be repaid before Christmas so he could get his wife’s gift out of layaway. Even with her own sister’s Christmas gift at stake, she didn’t repay the loan in time.
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Some people respond by giving loans that aren’t really loans. They “know that they are unlikely to be repaid and consider the loan a gift, but they do not feel it appropriate to tell a friend or a younger brother, for example, that they know he will be unable or unlikely to repay the loan.” This preserves the recipient’s dignity.
The stakes in these negotiations can be high, as “informal lenders and borrowers play the loan decision as a fine relational negotiation and as a martial art, juggling affect, relationship concerns, and moral claims, sometimes, with aplomb.” Both financial health and personal relationships, after all, are on the line.
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