Absolutely you should consider loaning money to your grown children.

Absolutely you should step back and embrace who your children have really become, so you go into the transaction eyes wide open.

Have a very matter-of-fact discussion and *listen* to their spoken and *unspoken* messages when talking amount, purpose, terms and their professed commitment to repaying you. Let your intuition help you determine if this is going to be alright, or turn into a problem.

Talk about default up front, loud and clear, for the sake of the life-long relationship, even if you completely trust them. Get all the nice and not-so-nice out in the open right from the start.

If the purpose is kind of "instant gratification," or something they really can't afford on their budget without your help (in other words, you would be enabling them to live beyond their means), or for something that will not have future value, do them a favor and don't lend them the money.

If the purpose is health or welfare related, loan the money and be prepared to be very flexible/generous in pay back terms.

Before you loan the money, decide what's more important - them or the money. If they totally screw up, be prepared to forget the money so the relationship endures. If you're the kind of person who can't forget, then you probably shouldn't loan them the money - just gift it to them if it's a health and welfare need, and otherwise just say no.

By all means, if you do decide to loan them money, right down all the ins and outs of the discussion/agreement. It doesn't have to be done with a lawyer (unless you want to do it that way), but be sure to include:

Name of lender(s) (you),
Name of borrower(s),
Date of loan,
Amount of loan,
Annual interest rate (if one),
Frequency of compounding of interest (if it's not a simple interest loan),
Length of loan (# of payments),
Amount of each loan payment,
Date that the first payment is due and due date of each subsequent payment (wk-ly / mo-ly / yr-ly / etc),
Description of collateral if there is any (car, home, etc),
Jurisdiction (City of or County of) in the event a legal ruling is ever needed,
Signatures of all parties, and witness(es) to signing.

If you feel it's necessary, you might include:
Penalty amount for late payment (and number of days grace period if this applies),
Procedure to be followed in the event of default (small claims, foreclosure - whatever you agree on).

This might sound too formal for family, but the process will help vet the family ramifications of the transaction for all involved, and bring everyone to a place of deeper commitment to not letting the transaction become a problem.

Not everyone will agree with my approach. Below are some articles that will offer several perspectives.
.

Yes, you should consider it. Here are some tips to make sure you get your money back:
* Get your grown child with you in a quiet area.
* Ask them how much they want to loan.
* Write something similar to:
My son/daughter ------------- (insert their full name) has loaned --------- (insert cash amount) from myself, ---------- (insert your full name), under the agreement that they will pay it back by ------------ (insert a date that you agree on). If they pay it later than this, they will also pay a charge of --------- (insert cash amount) -------- (insert time period, such as 'day', 'week' or 'month').
Signed: ------------- (Your full name)
----------------- (Your son/daughters full name)

Make sure that THEY sign it as well, otherwise if it did turn bad, they wouldn't have to pay the full amount back as you have no proof.

If you feel moved to assist them, by all means. Do not lend the money just because they are pestering you. Lend the money only if YOU want to do it.

If this is a "loan" and not a "gift.." enter into a written promissory note. Make sure you both get an original signed copied - so you need 2 unsigned copies which you both will sign.

Here comes the hard part. Make sure you send them a note if they miss a payment. If "Judge Judy" starts looking good, it will help that you have never stopped considering it as a loan, even when it was past due. You don't want to give the impression that you did not intend to keep the agreement in force.

By the way, can you float me a small loan for a hamburger today?

There is a difference between assisting your kids who may have fallen on hard times, and enabling kids who refuse to grow up or are consistently irresponsible with their money. The hardest thing for any parent is to say no to their children, but in certain circumstances it may be the wisest decision. However, if your kid has always been responsible and dependable, I don’t see why not. In many cases, it may be their godsend, since lenders are so tight-fisted these days and interest rates are through the roof, it’s harder for kids (especially straight out of college) to find financing. I think as long as you aren’t enabling and you set rules on how you want the loan to proceed, I think it’s a fine idea. You should set up specific loan terms if you do expect the loan to be repaid.

Yes absolutely, but there must be conditions:

If they work full time, you must ask the reason why they need this money. As you are loaning them this money, you have the right to suugest good money saving practices. Ask them how they will not let this happen again.

A loan is just that, a loan. They must repay.

The use of the money you are loaning to them must be acceptable to you. We needed money a while back (when we both worked part time) for car repairs, $3500 worth of car repairs (on two cars, of which $600 we borrowed from my father in law). We would not have been able to do so without the help of my father in law.

I agree with nancyke11y, you must have legal documents as well. Remember, a loan is just that, a loan. A bank would require such a thing. My father in law trusted us enough to know that we would repay him, and that we weren't using the money for anything but car repairs.

The amount. If it is only $100, and you can afford it, just give it to them. I have given a total of over $200 to my sister, b/c I knew she needed it. If it is upwards of some amount and you don't see them ever paying you back, give them what you can, so that you can also survive. Tell them to find the rest.

Do not deny them, just because you can. You are a person they trust, don't be too hard on them, but don't be too easy either. Good luck finding the balance. :o)