When Kelly McCain learned that her best friend of 22 years owed money to a former girlfriend, she didn’t hesitate to transfer $10,000 to her friend from a high-yield savings account that was reserved for emergencies.
Ms. McCain, 44, provided the loan in December with no interest, repayment timeline, written agreement or collateral.
Her friend, Kate Williams, 38, said she planned to fully repay the loan by mid-2027 and “would rather die” than not do so.
“This was an emergency,” Ms. McCain said. “We all get into financial pickles, and I’ve seen her get out of them before and come out on top, so I was just very confident in her ability to be true to that loan.”
As Americans struggle with high costs of living, they are increasingly turning to friends for financial support, especially as interest rates on personal loans remains high. Those rates average 12.27 percent and can go as high as 36 percent, according to recent data from Bankrate.
Three in four people in a 2025 survey by LendingTree said they had lent money to a friend, with men, millennials and parents of young children the most likely to do so. Surprisingly, lenders in the survey were more likely to say the loans had a positive impact on their friendship than a negative one.
Ms. Williams borrowed money from her former partner during what she described as a tumultuous relationship. She had completed the purchase of a mobile bartending business last summer and relied on money from a hospitality consulting gig that ultimately fell through. Ms. McCain insisted that Ms. Williams owe the money to her instead of her ex, believing it would give her more closure and distance from the relationship. She also offered to let Ms. Williams move into her home in Portland, Ore.
If her financial situation had allowed, Ms. McCain said, she would have given the money as a gift. And if she never receives the $10,000 back? She said it would not prevent her from paying her bills or affect the friendship. (Standard financial advice says to never lend out more than you can afford to lose.)
“I would have been terrified of it affecting the friendship,” Ms. Williams said, “not because of any chance in hell that I won’t pay her back but just because I wouldn’t want to put stress on her daily life in the interim.”
Introducing a loan can fundamentally change a friendship, regardless of how close the friends are, said Brad Klontz, a psychologist and certified financial planner in Boulder, Colo.
“We’re just friends, and now I want to have a borrower-lender relationship with you,” he said.
Both sides should understand the opportunity cost, Dr. Klontz said, because that money could otherwise have been invested. He said he would advise the lender-friend to be completely detached from how the borrower-friend spent the money. What happens if a friend needs money for rent but then takes a vacation? Or if you notice someone who owes you $100 dining at an expensive restaurant? These are situations that people should consider before lending.
Unpaid loans between friends, or a delay in repayment, may lead to emotional tension that can last a lifetime and, at times, shatter a friendship, Dr. Klontz said. One in three Americans in the Lending Tree survey said they had lost a friend over money.
“It’s not just about money,” Mr. Klontz said. “It’s about trust and loyalty and safety and support.”
Jason Rymiszewski and Brooke Basacchi live in Michigan, and both have long-term boyfriends but refer to each other as “soul mates.” Ms. Basacchi first asked Mr. Rymiszewski, a friend for 15 years, for financial help in January 2025 when she went a few weeks without a paycheck between jobs and was worried about affording groceries and a car payment. He lent her $800 about a week later with no contract or repayment deadline except for eventually repaying it.
“I felt like a failure, even for just asking,” Ms. Basacchi, 29, said.
Ms. Basacchi, who works full time as a barista, said health insurance, high food and household expenses, and the need to save money for an emergency fund had prevented her from repaying the loan. She does not know when she will be able to return the money but is certain she someday will.
“Since she’s stuck with me for the rest of her life, girl, I will get it eventually,” Mr. Rymiszewski, 33, said. He has considered the possibility that he might not, he added, and if that happens, he will consider the money a gift.
At the time, Ms. Basacchi had recently started dating her boyfriend and already received help from her family. She said it had felt natural to turn to Mr. Rymiszewski. The loan felt easy to navigate, they both agreed, because of their deep mutual trust.
Without a written contract that outlines the loan amount, the potential interest rate, the terms of repayment and what happens if it is not repaid, the money could legally be considered a gift, said Jackie Combs, a lawyer in Los Angeles.
“Whether or not your friends are in a high-trust relationship, including a partnership, it is still important to have legal agreements in place that protect your interests,” she said.
It is also important for people who are married to tell a spouse about lending to friends, Ms. Combs said, especially if the money comes from a shared account or could affect household finances.
There may also be tax implications. If a friend lends money with interest, the interest must be reported as taxable income, according to the Internal Revenue Service.
When Megan Pinto learned that her friend Vanessa Vega-Rivera was considering going to a pawnshop for a loan, she offered to front her the money instead. Two of Ms. Vega-Rivera’s paychecks from March and April, totaling about $5,000, were delayed, and she did not feel she could ask relatives for help, she said, because many of them work minimum-wage jobs. A planned trip from Orlando, Fla., to New York with her mother and daughter was coming up, and she didn’t have enough to pay for transportation and food.
Ms. Pinto, 40, sent Ms. Vega-Rivera $1,000 the night before her flight and was repaid less than a week later, plus $100 in interest.
“I have more appreciation for her,” Ms. Vega-Rivera, 35, said of Ms. Pinto. “I didn’t have to run around and stress and try to pawn things, and it was just kind of like a relieving moment.”
The two, who have been friends since 2020, work together as freelancers in the entertainment industry and bonded through 12-hour workdays and, at times, dealing with fluctuating and late paychecks. Neither grew up in a household where people spoke openly about finances, they said. As adults, those conversations became a part of their friendship and a reason the loan felt easy.
“I could not imagine Vanessa going to a pawnshop, like that just doesn’t seem right,” said Ms. Pinto, who lent the money without a formal agreement. “I’m very grateful that she was brave to even tell me her situation.”
Ms. Pinto had seen members of her family lend money to each other, and Ms. Vega-Rivera previously gave small loans to friends, which helped make them open to their agreement. In the end, they said, what mattered most was trust.
“We’re closer,” Ms. Pinto said. “She’s like my best friend. So, you know, it just brings you closer.”
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