Loaning Out My Personal Money

[Juan Santos]

Hello, so I am writing today because I was asked for a loan since they are short $1000 of deposit money for an apartment they are moving into. I’ve searched topics on here and online as well but most of the things I’ve come across deal with big money and not in small amounts like $1000 or less. I have several questions about loaning out my $1000.

1.) Is a simple text message from them that they will pay me back by x amount of time and for x amount per month interest sufficient or must I have documents ready for them to sign? Obviously, I think the latter is more secure but I ask because I’m out of state and I don’t know when I’ll return to see the person, yet I can send the funds electronically from anywhere, anytime. I’ve also seen Judge Judy episodes where the text messages sent between plaintiff and defendant are actually taken into account and impacts the outcome of the case. That’s why I ask if that would be sufficient proof for me too.

2.) Must there be collateral or can worst case scenario be that the judge orders them to pay me back?

3.) What is good interest rate for $1,000 over the course of 6 months? How about a year? The lender they first went to wanted to charge them $4,000 for the loan and that’s why they came to me next. Their credit is bad so I know I can be at risk but at the same time I think I can do less than $4,000 and still be okay. But since I’ve never really done one of these before and what I see online mostly deals with 5 figure numbers, I don’t know what any ball park number might be in my case that would be reasonable.

I think I had I had more questions but I can’t remember them now. Anyhow, any input on any of the above things would be helpful as well as anything I haven’t covered or am overlooking. Thanks.