Getting a loan has become a lot harder, thanks to the crisis rocking the credit markets. The tightening of the lending market could have a big impact on the people in your life who don't have much cash or credit history -- people like your kids. If your adult child wants to buy a house, start a business or just scrape together money to pay the bills, borrowing from mom and dad may be one of his or her only options.

Lending to children can be tricky, however. You don't want money to poison your relationship with your child -- and you definitely don't want to support bad habits. Before handing over a check to your son or daughter, think carefully about whether a loan is the best solution. If it is, consider how you want to set the terms of the payout.

Your first step: Weigh the merits of the request. If your child could forego the loan by making a sacrifice -- taking the bus instead of getting a new car, say -- encourage him or her to do so.

If your child has been financially irresponsible in the past, be realistic about the chance you'll get paid back. That said, it's also worth considering the possibility that your loan will help your kid straighten things out -- for example, by helping eliminate credit card debt or other financial baggage.

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You also need to make sure granting a loan won't stretch your own financial resources. After all, your dependents will all be worse off if their lifeline begins to sink. Discuss the decision with your spouse and possibly your financial advisor, and take into account how you would be affected if your child failed to repay the loan.

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